Case Study Description of Regulation: A Transaction Cost Perspective
This essay explores the immense impact of Oliver Williamson's writings and thoughts on contracting and organizations to research on the economics of regulation. Based on Williamson's transaction cost economics approach, this essay discusses the fundamental hazards inherent in government/utility-investors' interactions and explores how these hazards affect the way regulation is developed and the institutional environment within which these interactions take place.
Swot Analysis of "Regulation: A Transaction Cost Perspective" written by Pablo T. Spiller includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Williamson's Essay facing as an external strategic factors. Some of the topics covered in Regulation: A Transaction Cost Perspective case study are - Strategic Management Strategies, Financial management, Negotiations, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Regulation: A Transaction Cost Perspective casestudy better are - – challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google,
supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Regulation: A Transaction Cost Perspective
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Regulation: A Transaction Cost Perspective case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Williamson's Essay, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Williamson's Essay 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 Regulation: A Transaction Cost Perspective can be done for the following purposes –
1. Strategic planning using facts provided in Regulation: A Transaction Cost Perspective case study
2. Improving business portfolio management of Williamson's Essay
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 Williamson's Essay
Strengths Regulation: A Transaction Cost Perspective | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Williamson's Essay in Regulation: A Transaction Cost Perspective Harvard Business Review case study are -
Analytics focus
– Williamson's Essay 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 Pablo T. Spiller 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.
Highly skilled collaborators
– Williamson's Essay 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 Regulation: A Transaction Cost Perspective HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Williamson's Essay digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Williamson's Essay 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 lead change in Finance & Accounting field
– Williamson's Essay 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 Williamson's Essay in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Williamson's Essay is one of the most innovative firm in sector. Manager in Regulation: A Transaction Cost Perspective Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Williamson's Essay 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.
Effective Research and Development (R&D)
– Williamson's Essay 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 Regulation: A Transaction Cost Perspective - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Williamson's Essay has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Williamson's Essay 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.
Operational resilience
– The operational resilience strategy in the Regulation: A Transaction Cost Perspective 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Regulation: A Transaction Cost Perspective firm has clearly differentiated products in the market place. This has enabled Williamson's Essay to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Williamson's Essay to invest into research and development (R&D) and innovation.
High brand equity
– Williamson's Essay has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Williamson's Essay to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Williamson's Essay in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Regulation: A Transaction Cost Perspective | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Regulation: A Transaction Cost Perspective are -
Need for greater diversity
– Williamson's Essay 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Williamson's Essay 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.
Aligning sales with marketing
– It come across in the case study Regulation: A Transaction Cost Perspective 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 Regulation: A Transaction Cost Perspective can leverage the sales team experience to cultivate customer relationships as Williamson's Essay is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Regulation: A Transaction Cost Perspective 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 Williamson's Essay has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Regulation: A Transaction Cost Perspective, is just above the industry average. Williamson's Essay 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Regulation: A Transaction Cost Perspective, in the dynamic environment Williamson's Essay has struggled to respond to the nimble upstart competition. Williamson's Essay has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Williamson's Essay 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Williamson's Essay is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Regulation: A Transaction Cost Perspective 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 Williamson's Essay supply chain. Even after few cautionary changes mentioned in the HBR case study - Regulation: A Transaction Cost Perspective, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Williamson's Essay vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Williamson's Essay, firm in the HBR case study Regulation: A Transaction Cost Perspective needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Williamson's Essay is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Williamson's Essay needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Williamson's Essay to focus more on services rather than just following the product oriented approach.
Opportunities Regulation: A Transaction Cost Perspective | 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 Regulation: A Transaction Cost Perspective are -
Leveraging digital technologies
– Williamson's Essay 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.
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 Williamson's Essay 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.
Building a culture of innovation
– managers at Williamson's Essay 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Williamson's Essay can use these opportunities to build new business models that can help the communities that Williamson's Essay operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Williamson's Essay can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Williamson's Essay 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.
Using analytics as competitive advantage
– Williamson's Essay 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 Regulation: A Transaction Cost Perspective - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Williamson's Essay to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Williamson's Essay 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.
Loyalty marketing
– Williamson's Essay 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.
Creating value in data economy
– The success of analytics program of Williamson's Essay has opened avenues for new revenue streams for the organization in the industry. This can help Williamson's Essay to build a more holistic ecosystem as suggested in the Regulation: A Transaction Cost Perspective case study. Williamson's Essay can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Williamson's Essay is facing challenges because of the dominance of functional experts in the organization. Regulation: A Transaction Cost Perspective 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.
Better consumer reach
– The expansion of the 5G network will help Williamson's Essay to increase its market reach. Williamson's Essay 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.
Developing new processes and practices
– Williamson's Essay 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.
Threats Regulation: A Transaction Cost Perspective External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Regulation: A Transaction Cost Perspective are -
Consumer confidence and its impact on Williamson's Essay 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Regulation: A Transaction Cost Perspective, Williamson's Essay 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 .
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. Williamson's Essay can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Williamson's Essay business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
Shortening product life cycle
– it is one of the major threat that Williamson's Essay is facing in Finance & Accounting 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 Williamson's Essay with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Williamson's Essay 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. Williamson's Essay can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
High dependence on third party suppliers
– Williamson's Essay 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.
Regulatory challenges
– Williamson's Essay 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.
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 Williamson's Essay in the Finance & Accounting sector and impact the bottomline of the organization.
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. Williamson's Essay will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of Regulation: A Transaction Cost Perspective 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 Regulation: A Transaction Cost Perspective 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 Regulation: A Transaction Cost Perspective 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 Regulation: A Transaction Cost Perspective 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 Regulation: A Transaction Cost Perspective 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 Williamson's Essay needs to make to build a sustainable competitive advantage.
