Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements
While financial statements are the responsibility of management, they are ultimately a product of collaboration between management and their auditors--likely involving negotiations over proposed audit adjustments. This installment of Accounting Matters discusses the implications of prior research in psychology and social psychology regarding negotiations as applied to the context of auditor-client management negotiations. Specifically, we consider recently published research by Hatfield and colleagues regarding how these auditor-client discussions may be influenced in unexpected ways if not viewed through the lens of negotiation. This research finds that explicit consideration of negotiation characteristics (e.g., whether the unaudited financial statement data is the 'first offer' of client management, whether negotiations have created reciprocity pressures for the current negotiation) can influence these auditor-client discussions in predictable ways. Understanding the unconscious biases resulting from these 'negotiation rules' is key for auditors to effectively translate audit quality into improved financial statement quality.
Swot Analysis of "Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements" written by Richard C. Hatfield, Curtis Mullis includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Negotiations Auditor facing as an external strategic factors. Some of the topics covered in Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements case study are - Strategic Management Strategies, Financial management, Negotiations and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, wage bills are increasing, there is increasing trade war between United States & China, increasing energy prices, supply chains are disrupted by pandemic , increasing commodity prices,
competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, etc
Introduction to SWOT Analysis of Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Negotiations Auditor, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Negotiations Auditor 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 Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements can be done for the following purposes –
1. Strategic planning using facts provided in Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements case study
2. Improving business portfolio management of Negotiations Auditor
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Negotiations Auditor
Strengths Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Negotiations Auditor in Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Negotiations Auditor 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.
Low bargaining power of suppliers
– Suppliers of Negotiations Auditor in the sector have low bargaining power. Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Negotiations Auditor to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Negotiations Auditor is one of the leading recruiters in the industry. Managers in the Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Negotiations Auditor 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.
Diverse revenue streams
– Negotiations Auditor is present in almost all the verticals within the industry. This has provided firm in Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements 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.
Superior customer experience
– The customer experience strategy of Negotiations Auditor in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Negotiations Auditor has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Negotiations Auditor 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.
Learning organization
- Negotiations Auditor 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 Negotiations Auditor is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Negotiations Auditor is one of the most innovative firm in sector. Manager in Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Negotiations Auditor is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Negotiations Auditor
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Negotiations Auditor does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements 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.
Weaknesses Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Negotiations Auditor is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements can help to provide better information regarding products and services. It can also build an online community to further reach out to potential 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 Negotiations Auditor supply chain. Even after few cautionary changes mentioned in the HBR case study - Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Negotiations Auditor vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements 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 Negotiations Auditor has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Negotiations Auditor 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 Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements, is just above the industry average. Negotiations Auditor 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.
Need for greater diversity
– Negotiations Auditor 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements, it seems that the employees of Negotiations Auditor 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.
Slow to strategic competitive environment developments
– As Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements HBR case study mentions - Negotiations Auditor takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Negotiations Auditor 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.
Increasing silos among functional specialists
– The organizational structure of Negotiations Auditor is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Negotiations Auditor needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Negotiations Auditor 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 Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements 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 Negotiations Auditor 's lucrative customers.
Opportunities Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements | 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 Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Negotiations Auditor in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Negotiations Auditor to increase its market reach. Negotiations Auditor 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.
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 Negotiations Auditor in the consumer business. Now Negotiations Auditor can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Negotiations Auditor 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 Negotiations Auditor to hire the very best people irrespective of their geographical location.
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 Negotiations Auditor 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Negotiations Auditor can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Negotiations Auditor can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Negotiations Auditor 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Negotiations Auditor 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, Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Negotiations Auditor 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.
Developing new processes and practices
– Negotiations Auditor can develop new processes and procedures in Leadership & Managing People 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, Negotiations Auditor can use these opportunities to build new business models that can help the communities that Negotiations Auditor operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Creating value in data economy
– The success of analytics program of Negotiations Auditor has opened avenues for new revenue streams for the organization in the industry. This can help Negotiations Auditor to build a more holistic ecosystem as suggested in the Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements case study. Negotiations Auditor can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Negotiations Auditor with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Negotiations Auditor in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Shortening product life cycle
– it is one of the major threat that Negotiations Auditor is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Negotiations Auditor 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.
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 Negotiations Auditor business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Negotiations Auditor 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 Leadership & Managing People industry regulations.
Increasing wage structure of Negotiations Auditor
– 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 Negotiations Auditor.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Negotiations Auditor 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 Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements .
Environmental challenges
– Negotiations Auditor 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. Negotiations Auditor can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Negotiations Auditor can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Negotiations Auditor 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.
High dependence on third party suppliers
– Negotiations Auditor 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.
Weighted SWOT Analysis of Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements 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 Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements 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 Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements 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 Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements 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 Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements 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 Negotiations Auditor needs to make to build a sustainable competitive advantage.
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