Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency

In 1991 Peru undertook perhaps the most radical tax administration reform in the developing world as President Fujimori created the National Tax Administration Superintendency (SUNAT): a semi-autonomous revenue authority charged with putting the country's fiscal house in order. The reform met with initial success as it increased revenues and reduced evasion, though SUNAT's strategy came to be questioned by the same government that created it. In particular, the powerful ministry of finance raised doubts about the wisdom of SUNAT's autonomy and advocated taking a second look at the reform model. At the same time, corporate taxpayers, as well as the informal sector, vigorously joined the debate. This public sector reform, hailed as an important achievement in tax administration, raises serious questions about the reform of the state in developing countries by revisiting the old, fine line between politics and administration. HKS Case Number 1596.0

Authors :: Robert Taliercio

Topics :: Finance & Accounting

Tags :: Government, Leadership, Operations management, Project management, Strategic planning, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency" written by Robert Taliercio includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Reform Administration facing as an external strategic factors. Some of the topics covered in Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency case study are - Strategic Management Strategies, Government, Leadership, Operations management, Project management, Strategic planning and Finance & Accounting.

Some of the macro environment factors that can be used to understand the Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency casestudy better are - – geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, wage bills are increasing, etc

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Introduction to SWOT Analysis of Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Reform Administration, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Reform Administration 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency can be done for the following purposes –
1. Strategic planning using facts provided in Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency case study
2. Improving business portfolio management of Reform Administration
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 Reform Administration

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Strengths Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Reform Administration in Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency Harvard Business Review case study are -

Ability to lead change in Finance & Accounting field

– Reform Administration 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 Reform Administration in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Successful track record of launching new products

– Reform Administration has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Reform Administration 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.

Diverse revenue streams

– Reform Administration is present in almost all the verticals within the industry. This has provided firm in Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency 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.

Sustainable margins compare to other players in Finance & Accounting industry

– Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency firm has clearly differentiated products in the market place. This has enabled Reform Administration to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Reform Administration to invest into research and development (R&D) and innovation.

Analytics focus

– Reform Administration 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 Robert Taliercio can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.

Innovation driven organization

– Reform Administration is one of the most innovative firm in sector. Manager in Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency 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 Reform Administration 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.

Learning organization

- Reform Administration 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 Reform Administration is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Training and development

– Reform Administration has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency 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.

Organizational Resilience of Reform Administration

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Reform Administration does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Superior customer experience

– The customer experience strategy of Reform Administration in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Operational resilience

– The operational resilience strategy in the Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency 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.

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Weaknesses Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency are -

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Reform Administration is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency 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 operating costs

– Compare to the competitors, firm in the HBR case study Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency 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 Reform Administration 's lucrative customers.

Skills based hiring

– The stress on hiring functional specialists at Reform Administration 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.

Slow to strategic competitive environment developments

– As Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency HBR case study mentions - Reform Administration 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.

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency, it seems that the employees of Reform Administration 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.

Workers concerns about automation

– As automation is fast increasing in the segment, Reform Administration 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.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency, is just above the industry average. Reform Administration 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.

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 Reform Administration supply chain. Even after few cautionary changes mentioned in the HBR case study - Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Reform Administration vulnerable to further global disruptions in South East Asia.

High cash cycle compare to competitors

Reform Administration 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.

Need for greater diversity

– Reform Administration 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.

Interest costs

– Compare to the competition, Reform Administration 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.

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Opportunities Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency | 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 Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency are -

Leveraging digital technologies

– Reform Administration 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.

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. Reform Administration 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. Reform Administration 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.

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 Reform Administration in the consumer business. Now Reform Administration can target international markets with far fewer capital restrictions requirements than the existing system.

Manufacturing automation

– Reform Administration 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.

Better consumer reach

– The expansion of the 5G network will help Reform Administration to increase its market reach. Reform Administration 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.

Using analytics as competitive advantage

– Reform Administration 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 Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Reform Administration to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

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 Reform Administration 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 Reform Administration has opened avenues for new revenue streams for the organization in the industry. This can help Reform Administration to build a more holistic ecosystem as suggested in the Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency case study. Reform Administration can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

Low interest rates

– Even though inflation is raising its head in most developed economies, Reform Administration 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

– Reform Administration 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Reform Administration 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 Reform Administration to hire the very best people irrespective of their geographical location.

Learning at scale

– Online learning technologies has now opened space for Reform Administration to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Reform Administration 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.

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Threats Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency are -

Increasing wage structure of Reform Administration

– 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 Reform Administration.

Consumer confidence and its impact on Reform Administration 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.

Environmental challenges

– Reform Administration 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. Reform Administration can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Reform Administration 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 Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency .

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Reform Administration in the Finance & Accounting industry. The Finance & Accounting 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.

Technology acceleration in Forth Industrial Revolution

– Reform Administration has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Reform Administration 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.

Shortening product life cycle

– it is one of the major threat that Reform Administration 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 Reform Administration with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency, Reform Administration 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 .

Capital market disruption

– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Reform Administration.

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. Reform Administration 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.

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. Reform Administration needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.

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 Reform Administration in the Finance & Accounting sector and impact the bottomline of the organization.

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Weighted SWOT Analysis of Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency 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 Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency 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 Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency 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 Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency 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 Raising Revenues or Raising Hackles?: Radical Public Sector Reform in Peru's National Tax Adminstration Superintendency 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 Reform Administration needs to make to build a sustainable competitive advantage.

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