5.5 Assignment: Capstone Project

6

Andrew Company

Andrew Company

Antonio Gilbert

Indiana Wesleyan University

Strategy and Policy (MGMT-522-01D)

Dr Michael White

October 23, 2021

Section One

History Background

Andrew & CO. is a company best known for its excellent services to its clients. In particular, the company has been providing financial services to new or existing businesses, non-profit organizations and advising clients on their financial accountability. It is based in Coral Springs, FL, specializing in individual tax preparations and full-service accounting operations or services. It became public in 2001 and got registered in NYE in 2002. When it started, it had only employed about one hundred employees. With time, it has constantly increased its employees to reach over two thousand workforce members.

Mission and Vision Statements

The mission statement of Andrews and Co. is to remain trustworthy and reliable to the finance of its clients. In essence, the company is committed to ensuring that it provides effective professional accountants to its clients' family or business financial activities. It intends to build trust with its customers by making them feel comfortable and satisfied with the services offered on its premises. On the other hand, the company's vision statement is to build an environment that will motivate its clients to continue inquiring about financial services and build loyal customers for long-term experience. It has experienced and skilled workforce labor that provides standardized and quality services to the clients who visit its organization seeking financial assistance. From personal financial assistance to small and medium-sized organizations, the company has remained outstanding based on its clients' services at all times. Over time, it has constantly increased the number of loyal customers. It is committed to continuing with the trend and remaining at the top of its competitors in terms of financial services.

Principle Business Model 

The principle business model for the company is primarily based on the services it offers to its clients. It has numerous financial services that it relies on for sales and revenues, which reflects profitability margin. The primary client services that the company depends on for profitability include individual income tax preparation, corporate taxation, family personal accountant, and business accountant. Client services serve the company with over fifty percent of its overall revenue. The target market for the company includes individuals, families, and businesses at all levels that may need financial services, such as a professional accountant.

The Industry's Brief Description

Andrew & Co. is an organization operating in client-based services or customer service. The industry is currently at $350 billion, and it is expected to grow even further as globalization takes shape in the world of advanced technology (Morgan, 2017). The industry has constantly changed with the rapidly changing technology where many organizations are considering going online with their operations. With several businesses getting attracted to the internet, the industry will continue expanding and growing as more financial services are frequently requested by clients.

The Company's Competitors

As the industry grows, there is a high rate of new entries into the market, increasing the company's competition force. Some of the company's primary rivalry companies include Berkshire Hathaway, which has a total revenue of $247.5 billion; Ping An Insurance Group, with $163.50 billion; and Allianz, which has a total revue of $143.86 billion. The company is the leading organization in Andrew's industry, and they are the entities that have more market shares.

Section 2

PESTEL Analysis

Political: the industry is more prompt to the impacts caused by the government or the legal policies. For instance, recently, the current increased income tax, including other taxes being imposed by the government, has significantly affected the prices Andrews & Co. charges to its clients for services it offers.

Economic: economic growth, inflation rates, and the company's debt are the core factors that tend to influence the company's operations. Financial factors such as fluctuations are typically beyond the company's control, impacting Andrew Company sales and revenue significantly.

Social: the company must retain an excellent reputation to the public or face customers' harmful cultural norms and attitudes. Also, the company has a good communication and interaction channel between the senior executive members and the organization workforce.  

Technology: being in an industry that is rapidly growing with advanced technology, it experiences a competitive force from the companies which have already integrated their operations into the online services.

Environmental: Factors such as geography, waste management, and local attitudes towards pollution have put the company into numerous lawsuits leading to substantial losses.

Porter's Five Forces Analysis

Based on the bargaining power of buyers, the company experiences the need to lower its services to clients due to the buyer power. The industry is overcrowded, thereby giving the buyers more power to predict the services' prices (Innovationtactics, 2018). Also, some of the factors affecting the bargaining power of suppliers include clients' switching barriers, patent and industry standards related to financial services. Besides, as the industry grows, more organizations are entering the financial services industry, leading to overcrowding and interference of the standard market price related to the services.

Internal Financial Analysis    

The internal financial analysis of the organization is typically conducted internally. The accounting department often does the operation, which is then shared with the entity's management to improve decision-making. The company's internal financial can be considered as stable as shown by its most recent financial reports. Particularly, its ratio analysis indicates that it is in the position of meeting its current obligations without affecting any of its assets. This makes it more attractive to investors.

Major Goals of the Company

The company's primary goal is to have its presence across the globe. It plans to expand its services across the globe, where most of its potential clients are located. Especially in emerging markets such as China, India, Mexico, and Brazil, the company plans to open its operational entities. This will enable it to increase its sales and revenue, thereby contributing to a high-profit margin. One of its strategies with no success was when it acquired another entity to increase its revenue share. The strategy failed to go as initially planned, and in contrast, it cost the company huge losses after it later sold it to another organization but at a lower price than it had acquired it.

The Current Competitive Landscape

The company's name used in the analysis was Andrews & Co., which was established in 1981 by Alfred H. Andrews. It operates in the client-based service industry, where it offers financial-related services to clients' private or businesses finance. The industry is in an aggressive growing stage as the rate of new entries is high thereby increasing the competitive force. The primary competitors to Andrews & Co. include Berkshire Hathaway, Ping And Insurance Group and Allianz Holding Company. The rivalry companies to Andrews & Co. offers diversified investments, Property & casualty insurance, Utilities, Restaurants, Food processing and other basic client-based services. Most of these competitors apply differentiation strategy to their organizations' business to offer the services to clients. It is a strategy that enables an entity to target a specific group of audiences based on high social class. Such an audience do not care much about prices, but they are concerned with the quality offered. However, the differentiation strategy may fail to work due to the financial position of the company. It is a strategy that requires substantial capital to enable the organization to offer quality services that qualify for premium pricing.

Strategic Response #1: The possible environmental change that can impact the entity is demographic factors. These are the characteristics and behavior of the targeted audience in a specific geographical area towards the services offered. In particular, the concern is on income and level of education based on the specific population. The company can consider utilizing a differentiation strategy by increasing the finance or funding sources. This will enable it to increase the demands of the targeted audience, which entails high-value services. Based on this type of strategy, the competition follows value enhancement rather than price orientation. In other words, the targeted audience focuses more on value creation than the price offered for the services.

Strategic Response #2: The Company can also use a cost-differentiation strategy which, unlike differentiation, focuses on price. It is the most appropriate given the financial position of the company. It requires low capital for services production, but the quality does not qualify to be premium. Here, the company can lower the production costs of its services to lower the prices offered to the clients. Occasionally, this type of strategy best suits economic factors where an individual's income is based on the middle class. It should evaluate whether pursuing in-house service production is lower than the transaction costs in the market to integrate for cost-efficiency achievement vertically. For instance, the company can hire an outside accountant professional to offer financial services to a particular firm in the form of a contract which may be a bit cheaper than employing the accountant in a full-basis manner.

Strategic #3: Essentially, the company should consider combining differentiation and cost leadership with its organizational strategy. This is through strategic alliance, which aims at sharing knowledge, capabilities and resources for services development. The strategic approach is practical as it will potentially influence the entity's competitive advantage by increasing its services' value and lowering its production costs. This will enable the company to access both emerging and emerging markets, which will increase sales and revenues. The company's benefits from the strategy include a solid competitive position, increased opportunities for entrance into new markets, both emerged and emerging markets, hedge against uncertainty, and learning new capabilities and potentials.

References

Innovationtactics. (2018). Strategy: Porter's Five Forces explained. Retrieved; https://innovationtactics.com/porter-five-forces/

Morgan B. (2017). Customer Service Is A $350 Billion Industry, And It's A Mess. Retrieved; https://www.forbes.com/sites/blakemorgan/2017/09/25/customer-service-is-a-350b-industry-and-its-a-mess/?sh=12704d8b11be

Tsourela M., Paschaloudis D., Fragidis G. (2015). SWOT Analysis of Service e-business Models.