The IASB at a Crossroads: The Future of International Financial Reporting Standards B SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of The IASB at a Crossroads: The Future of International Financial Reporting Standards B

Supplement for case 111084. In late 2012, IASB chair Hans Hoogervorst, just over a year into his term, must address several serious geopolitical challenges that can derail IFRS growth. The SEC has issued a report outlining why the U.S. should not adopt IFRS. Other major economies such as Japan and India begin to dither on IFRS as well. The E--the IASB's main backers--is embroiled in a debt crisis that divides it; Britain--the strongest voice for IFRS in the EU--lirts with an EU exit. And China remains silent. Adding to these issues are longstanding concerns about the IASB's legal status and its finances. How can Hoogervorst return momentum to IFRS?

Authors :: Karthik Ramanna, Karol Misztal, Daniela Beyersdorfer

Topics :: Finance & Accounting

Tags :: Government, International business, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "The IASB at a Crossroads: The Future of International Financial Reporting Standards B" 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 Hoogervorst facing as an external strategic factors. Some of the topics covered in The IASB at a Crossroads: The Future of International Financial Reporting Standards B case study are - Strategic Management Strategies, Government, International business 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 B casestudy better are - – increasing household debt because of falling income levels, technology disruption, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, 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, wage bills are increasing, etc

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Introduction to SWOT Analysis of The IASB at a Crossroads: The Future of International Financial Reporting Standards B

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 B case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ifrs Hoogervorst, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ifrs Hoogervorst 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 The IASB at a Crossroads: The Future of International Financial Reporting Standards B 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 B case study
2. Improving business portfolio management of Ifrs Hoogervorst
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 Hoogervorst

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Strengths The IASB at a Crossroads: The Future of International Financial Reporting Standards B | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Ifrs Hoogervorst in The IASB at a Crossroads: The Future of International Financial Reporting Standards B Harvard Business Review case study are -

Training and development

– Ifrs Hoogervorst 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 B 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.

High switching costs

– The high switching costs that Ifrs Hoogervorst 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.

Highly skilled collaborators

– Ifrs Hoogervorst 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 B HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Ability to recruit top talent

– Ifrs Hoogervorst is one of the leading recruiters in the industry. Managers in the The IASB at a Crossroads: The Future of International Financial Reporting Standards B are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

Sustainable margins compare to other players in Finance & Accounting industry

– The IASB at a Crossroads: The Future of International Financial Reporting Standards B firm has clearly differentiated products in the market place. This has enabled Ifrs Hoogervorst to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Ifrs Hoogervorst to invest into research and development (R&D) and innovation.

Organizational Resilience of Ifrs Hoogervorst

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

Effective Research and Development (R&D)

– Ifrs Hoogervorst 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 B - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Superior customer experience

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

Digital Transformation in Finance & Accounting segment

- digital transformation varies from industry to industry. For Ifrs Hoogervorst digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ifrs Hoogervorst 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.

Strong track record of project management

– Ifrs Hoogervorst is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Low bargaining power of suppliers

– Suppliers of Ifrs Hoogervorst in the sector have low bargaining power. The IASB at a Crossroads: The Future of International Financial Reporting Standards B has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ifrs Hoogervorst to manage not only supply disruptions but also source products at highly competitive prices.

Ability to lead change in Finance & Accounting field

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

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Weaknesses The IASB at a Crossroads: The Future of International Financial Reporting Standards B | 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 B are -

Interest costs

– Compare to the competition, Ifrs Hoogervorst 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.

Lack of clear differentiation of Ifrs Hoogervorst products

– To increase the profitability and margins on the products, Ifrs Hoogervorst needs to provide more differentiated products than what it is currently offering in the marketplace.

Increasing silos among functional specialists

– The organizational structure of Ifrs Hoogervorst is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Ifrs Hoogervorst needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ifrs Hoogervorst to focus more on services rather than just following the product oriented approach.

Low market penetration in new markets

– Outside its home market of Ifrs Hoogervorst, firm in the HBR case study The IASB at a Crossroads: The Future of International Financial Reporting Standards B needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Workers concerns about automation

– As automation is fast increasing in the segment, Ifrs Hoogervorst 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.

Capital Spending Reduction

– Even during the low interest decade, Ifrs Hoogervorst 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.

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 B 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 Hoogervorst has relatively successful track record of launching new products.

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 Ifrs Hoogervorst supply chain. Even after few cautionary changes mentioned in the HBR case study - The IASB at a Crossroads: The Future of International Financial Reporting Standards B, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ifrs Hoogervorst vulnerable to further global disruptions in South East Asia.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ifrs Hoogervorst is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The IASB at a Crossroads: The Future of International Financial Reporting Standards B 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 bargaining power of channel partners

– Because of the regulatory requirements, Karthik Ramanna, Karol Misztal, Daniela Beyersdorfer suggests that, Ifrs Hoogervorst is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.

High cash cycle compare to competitors

Ifrs Hoogervorst 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.

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Opportunities The IASB at a Crossroads: The Future of International Financial Reporting Standards B | 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 B are -

Learning at scale

– Online learning technologies has now opened space for Ifrs Hoogervorst 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.

Leveraging digital technologies

– Ifrs Hoogervorst 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Ifrs Hoogervorst 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.

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 Hoogervorst 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 Hoogervorst 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.

Building a culture of innovation

– managers at Ifrs Hoogervorst 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.

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 Hoogervorst can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Buying journey improvements

– Ifrs Hoogervorst can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The IASB at a Crossroads: The Future of International Financial Reporting Standards B suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.

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. Ifrs Hoogervorst can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Developing new processes and practices

– Ifrs Hoogervorst 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Ifrs Hoogervorst 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.

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

Better consumer reach

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

Manufacturing automation

– Ifrs Hoogervorst 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.

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Threats The IASB at a Crossroads: The Future of International Financial Reporting Standards B 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 B are -

Stagnating economy with rate increase

– Ifrs Hoogervorst can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.

High dependence on third party suppliers

– Ifrs Hoogervorst 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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Ifrs Hoogervorst 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.

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

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 B, Ifrs Hoogervorst 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. Ifrs Hoogervorst 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 Hoogervorst in the Finance & Accounting sector and impact the bottomline of the organization.

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.

Regulatory challenges

– Ifrs Hoogervorst 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.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ifrs Hoogervorst with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

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. Ifrs Hoogervorst 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.

Shortening product life cycle

– it is one of the major threat that Ifrs Hoogervorst is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Increasing wage structure of Ifrs Hoogervorst

– 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 Hoogervorst.

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Weighted SWOT Analysis of The IASB at a Crossroads: The Future of International Financial Reporting Standards B 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 B 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 B 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 B 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 B 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 Hoogervorst needs to make to build a sustainable competitive advantage.

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