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 - – talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, technology disruption, challanges to central banks by blockchain based private currencies, wage bills are increasing,
there is backlash against globalization, increasing transportation and logistics costs, 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.
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.
Highly skilled collaborators
– Negotiations Auditor 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 Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
High brand equity
– Negotiations Auditor has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Negotiations Auditor to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Negotiations Auditor digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Negotiations Auditor 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.
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.
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.
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.
Ability to lead change in Leadership & Managing People field
– Negotiations Auditor 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 Negotiations Auditor in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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 -
High cash cycle compare to competitors
Negotiations Auditor 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.
Lack of clear differentiation of Negotiations Auditor products
– To increase the profitability and margins on the products, Negotiations Auditor needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the 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.
Low market penetration in new markets
– Outside its home market of Negotiations Auditor, firm in the HBR case study Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Negotiations Auditor needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
No frontier risks strategy
– After analyzing the HBR case study Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements, in the dynamic environment Negotiations Auditor has struggled to respond to the nimble upstart competition. Negotiations Auditor has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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 -
Using analytics as competitive advantage
– Negotiations Auditor 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 Negotiations Between Auditors and their Clients Regarding Adjustments to the Financial Statements - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Negotiations Auditor to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Negotiations Auditor can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
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.
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.
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.
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.
Leveraging digital technologies
– Negotiations Auditor 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
– 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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Negotiations Auditor 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. Negotiations Auditor 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.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 Negotiations Auditor in the Leadership & Managing People sector and impact the bottomline of the organization.
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.
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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