The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The IASB at a Crossroads: The Future of International Financial Reporting Standards (A)
What are the major challenges to the continued growth of IFRS worldwide? Should countries be encouraged to pursue "full adoption" of IFRS or should each country determine its own IFRS "convergence" strategy? Given the limitations of governance and information-intermediation institutions worldwide, should IFRS limit the use of fair-value accounting? How should the IASB respond to the growing power of emerging markets such as China in international standard setting? What lessons can be learned from the growth and development of IFRS for international harmonization of corporate governance standards more broadly? This case first describes the IASB's major accomplishments over the 2001-2010 period and then outlines the major challenges to the continued growth of IFRS as it enters its second decade.
Authors :: Karthik Ramanna, Karol Misztal, Daniela Beyersdorfer
Swot Analysis of "The IASB at a Crossroads: The Future of International Financial Reporting Standards (A)" written by Karthik Ramanna, Karol Misztal, Daniela Beyersdorfer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ifrs Iasb facing as an external strategic factors. Some of the topics covered in The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) case study are - Strategic Management Strategies, Business processes, Corporate governance, Emerging markets, Ethics, Financial management, Globalization, Government, Growth strategy, Strategy execution and Finance & Accounting.
Some of the macro environment factors that can be used to understand the The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, increasing household debt because of falling income levels, increasing transportation and logistics costs,
central banks are concerned over increasing inflation, geopolitical disruptions, etc
Introduction to SWOT Analysis of The IASB at a Crossroads: The Future of International Financial Reporting Standards (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ifrs Iasb, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ifrs Iasb operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) can be done for the following purposes –
1. Strategic planning using facts provided in The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) case study
2. Improving business portfolio management of Ifrs Iasb
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 Ifrs Iasb
Strengths The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ifrs Iasb in The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) Harvard Business Review case study are -
Analytics focus
– Ifrs Iasb 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 Karthik Ramanna, Karol Misztal, Daniela Beyersdorfer can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Cross disciplinary teams
– Horizontal connected teams at the Ifrs Iasb 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.
Successful track record of launching new products
– Ifrs Iasb has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ifrs Iasb 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.
Ability to lead change in Finance & Accounting field
– Ifrs Iasb 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 Ifrs Iasb in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Ifrs Iasb 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 Ifrs Iasb is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Ifrs Iasb
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ifrs Iasb 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 The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) 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.
Effective Research and Development (R&D)
– Ifrs Iasb 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 The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Ifrs Iasb has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Ifrs Iasb digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ifrs Iasb 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.
Highly skilled collaborators
– Ifrs Iasb has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Ifrs Iasb has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ifrs Iasb to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The IASB at a Crossroads: The Future of International Financial Reporting Standards (A), in the dynamic environment Ifrs Iasb has struggled to respond to the nimble upstart competition. Ifrs Iasb has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– Ifrs Iasb 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) 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 Ifrs Iasb has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The IASB at a Crossroads: The Future of International Financial Reporting Standards (A), is just above the industry average. Ifrs Iasb 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.
Capital Spending Reduction
– Even during the low interest decade, Ifrs Iasb has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Lack of clear differentiation of Ifrs Iasb products
– To increase the profitability and margins on the products, Ifrs Iasb needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Ifrs Iasb has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) HBR case study mentions - Ifrs Iasb 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Ifrs Iasb 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.
Skills based hiring
– The stress on hiring functional specialists at Ifrs Iasb 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.
No frontier risks strategy
– After analyzing the HBR case study The IASB at a Crossroads: The Future of International Financial Reporting Standards (A), it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) are -
Creating value in data economy
– The success of analytics program of Ifrs Iasb has opened avenues for new revenue streams for the organization in the industry. This can help Ifrs Iasb to build a more holistic ecosystem as suggested in the The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) case study. Ifrs Iasb 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 Ifrs Iasb in the consumer business. Now Ifrs Iasb can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Ifrs Iasb 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.
Manufacturing automation
– Ifrs Iasb can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ifrs Iasb 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, The IASB at a Crossroads: The Future of International Financial Reporting Standards (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ifrs Iasb can use these opportunities to build new business models that can help the communities that Ifrs Iasb operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Leveraging digital technologies
– Ifrs Iasb 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.
Using analytics as competitive advantage
– Ifrs Iasb has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ifrs Iasb to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ifrs Iasb is facing challenges because of the dominance of functional experts in the organization. The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) 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.
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. Ifrs Iasb 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. Ifrs Iasb can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ifrs Iasb can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ifrs Iasb 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 Ifrs Iasb to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Ifrs Iasb can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) are -
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 Ifrs Iasb business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ifrs Iasb can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Ifrs Iasb needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Increasing wage structure of Ifrs Iasb
– 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 Ifrs Iasb.
Technology acceleration in Forth Industrial Revolution
– Ifrs Iasb has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Ifrs Iasb needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ifrs Iasb with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Ifrs Iasb 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 Ifrs Iasb in the Finance & Accounting sector and impact the bottomline of the organization.
Consumer confidence and its impact on Ifrs Iasb 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 The IASB at a Crossroads: The Future of International Financial Reporting Standards (A), Ifrs Iasb 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 .
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.
Environmental challenges
– Ifrs Iasb 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. Ifrs Iasb can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
High dependence on third party suppliers
– Ifrs Iasb 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 The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of The IASB at a Crossroads: The Future of International Financial Reporting Standards (A) 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 Ifrs Iasb needs to make to build a sustainable competitive advantage.
Feel free to connect with us if you need business research.
You can download Excel Template of Case Study Solution & Analysis of The IASB at a Crossroads: The Future of International Financial Reporting Standards (A)