Managing Strategy Analysis: H&R Block, Inc.

Introduction

H&R Block, Inc. operates in the tax industry, providing tax services to millions of consumers globally. This company provides services in the preparation of tax returns for consumers through their professionals. Provision of such services takes place in almost 12,000 tax offices that the company owns as well as franchise retails globally (H&R Block, n.p.). Through its tax softwares, H&R Block meets the needs of DIY consumers who include both companies and individuals. Apart from tax returns, H&R Block as well offers adjacent services pertaining to tax products. Being in the tax industry strategic approaches remain highly significant in marketing the company's tax products and services through different avenues to progressively maintain competitive advantage (H&R Block, n.p.). Considering that tax products present a thriving option for different individuals and companies in fulfilling all regulatory requirements, the H&R Block brand remains a strong player in the tax industry.

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Strategy Statement

Providing high value offers through focusing on effective pricing, investing in relevant technologies, differentiation strategies, and upholding optimal operational superiority to make H&R Block the unsurpassed choice for clients.

The External Environment

A clear depiction of the external environment in which H&R Block operates can be seen through an analysis of the opportunities and threats faced by the company.

Opportunities

Opportunity for amplified brand significance for wider market coverage. H&R Block retains the reputation of founding the tax industry, with over 60 tax seasons completed (H&R Block, n.p.). It owns the largest market share in the category of assisted tax preparer across the United States extending to 15% with an unrivaled scale of operation through widespread H&R Block company-owned and franchised offices that serve clients (H&R Block, n.p.).

Opportunity for smooth and dependable experience for customers. Through its outstanding capability and proficiency in tax services courtesy of a large pool of highly trained and experienced professionals. A high employee tenure of over 10 years keeps turnover low thus an opportunity for offering consistently high quality services.

Opportunity to revolutionize cross-channel service conveyance. Through their strong enhancement capacity for products and services, the company makes the tax services expeditious while minimizing costs (H&R Block, n.p.). Robust technological platforms allow for remote access to services thus expanding the customer base.

Use of strategic resources to steer growth. The opportunity presents through investing in different value added products coupled with the increased demand for value added products such as Tax Identity Shield, Refund Advance, Peace of Mind and Emerald Prepaid MasterCard among others (H&R Block, n.p.).

The presence of a robust market growth that offers a massive opportunity for the company's expansion both in the US and internationally.

Threats

The absence of sufficient numbers of professionals in different global spheres presents a threat to expansion in the upcoming global markets.

Possible reduction in the portfolio of products in case of reduced innovations over the course of years. This could threaten the company's progressive profitability.

A major threat is litigation. H&R Block faces lawsuits in connection with the different business activities conducted in tax preparation. As such, existing or future proceedings may harm the company's reputation, damage product offers, or cause massive losses and material liabilities. The various law suits that typically face H&R Block include class actions, arbitrations, or investigations by state prosecutors as well as other litigation related to the different products and service offerings (H&R Block, 9).

Industry Analysis

In the Tax Preparer Industry, the larger proportion of tax preparers comprise of big companies where majority have more than 50 0ffices. These big companies such as H&R Block take up the largest share of the tax preparer market. From an average point of view, the U.S. tax market increases by 1-2% yearly and is greatly correlated to diversified forms of employment. Unlike the common misconception, the tax preparer market retains its resilience, ensuring profitability in both recession and boom periods (H&R Block, 9). A major reason for this trend is the fact that taxpayers derive motivation to file returns, since factually around 75% obtain refunds.

As a large industry, two categories exist, namely the do-it-yourself (DIY) and the assisted category. Statistics show that assisted tax preparer category remains the most preferred among US citizens, with more than half opting for it. In fact, the division between DIY and Assisted tax preparation stands at 44% DIY and at 56% Assisted. Nonetheless, significant growth has been noted in the DIY category, with the result being a small shift in the split. The continuing progress in the DIY category arises from tax software which has received a major boost from the increase in the tax payers switching to online filling from pen & paper filling approaches. Despite the increase, the assisted category spawns the vast majority of revenue in the industry.

In the tax preparer industry, there are numerous products that have been introduced into the market. However, H&R Block stands out through offering more than tax preparation by offering a diverse portfolio of products and services. Some of these products and services include Year-round assistance resolving tax issues, Tax Plus suite of products, as well as Bookkeeping and business services among others. This makes the company to stand out in the industry.

The major competitors that H&R Block faces include big companies such as PricewaterhouseCoopers, Ernst & Young, Deloitte, KPMG LLP, McGladrey & Pullen, Liberty Tax Service, Ryan, as well as Jackson Hewitt Tax Service. As the leading company in the industry, H&R Block should classify and emphasize the position of its products. The objective should be towards maintaining cumulative growth every year.

Porter's Five Forces

1. Supplier power. In this regard, it involves evaluating the ease of price increase due to the influence of suppliers. Major aspects of concern include the various suppliers in every critical input, the distinctiveness of services and products offered, comparative size and power of the supplier as well as the cost of changing suppliers. From their operations, H&R Block commands huge supplier power as it owns more than 10,000 0ffices and has franchises that supply tax services (H&R Block, 7). As a result, it manages to maintain considerable influence as the leading player in the tax preparer industry.

2. Buyer power. This force considers the degree of ease to which buyers manage to cause a drop in prices. Where a company has few buyers with much buying power, it becomes possible for them to drive down the prices. In this case, H&R Block has a huge clientele base which means that buyers exert insignificant effects on prices.

3. Competitive rivalry. An industry with different capable competitors influence the degree of competition in the market. The main companies in the tax preparer industry include PricewaterhouseCoopers, Deloitte, Ernst & Young, as well as KPMG LLP. The ability to offer differentiated services and products makes H&R Block a strong competitor, making it the leader in the industry.

4. Threat of substitution. Since the company majors in both DIY and Assisted categories, it means that the threat of close alternative products remain absent in the market. As such, it decreases the possibility of clients moving to substitutes as a result of an increase in prices.

5. Threat of new entry. As a highly profitable industry, the tax preparer market is strongly attractive to fresh entrants. However, H&R Block maintains profitability as an incumbent player due to its robust and resilient approaches, such as high scalability, and strong capital base. In effect, the company faces insignificant threat of a decline in profitability.

PESTEL

1. Political: H&R Block is a leader in the tax preparer industry and complies with the regulations by the IRS. As a result, all firms in the industry have to uphold a strong standard of the regulations stipulated by the IRS with constancy (H&R Block, 8). Similarly, having global services means that they have to comply with different market regulations throughout the globe. The political situation matters significantly as the occurrence of instability or civil strife in particular markets or inflation tends to affect profitability in the negative. As such, H&R Block has to adhere to all policies as well as political situations to maintain profitability.

2. Economic: The major concern pertains to economic recessions which tend to depress the economy. Unfriendly economic situations force companies into restructuring their operations, especially with diminishing revenues that require downsizing. Although economic conditions impact the highest effect on an industry, in H&R Block's favor, the need for filling tax returns depicts resilience, even in the harshest of economic times.

3. Social: Social aspects prominently impact H&R Block both in its services and brand image across different cultures. Likewise, it requires to connect its global brand image to enhance its reputation in offering quality products and services (H&R Block, 8). Typically, the social effects manifest during marketing campaigns where H&R Block for has to align with the different preferences as the key to understanding the motivating social aspects of the market and ways of utilizing opportunities that manifest.

4. Technological: Owing to the great progress in technology, businesses have totally integrated with the latest technological changes. Apart from the existing social media platforms and softwares, H&R Block boasts of a team of innovators who keep developing cutting edge softwares that meet their consumer's needs (H&R Block, 8). To enable further domination in the industry, H&R Block needs to maintain a forward trend in technological developments and devising ways of reaching out to consumers to maintain an increase in consumer base.

5. Legal: Due to the sensitivity of the tax industry, the company faces different legal consequences upon violation of established codes. Previously, H&R Block has faced court proceedings due to some legal issues pertaining to its services (H&R Block, 9). A different incidence involved one of its softwares where the clients found that it was not fool-proof. The result was a massive refund to consumers which resulted in substantial financial implications. Therefore, the company needs to avoid legal issues that may hurt its reputation and finances.

6. Environmental: Different environmental issues can affect H&R Block, but less significantly disrupt its business and profitability as the environment tends to significantly affect businesses in the agricultural sector.

H&R Block's Internal Resources and Capabilities

Through VRIO analysis, different capabilities and resources established focus on the four aspects.

Products. The corporation majors on the provision of tax services and products as well as sale of softwares. H&R Block makes use of unique product specifications and design which make it difficult for the rivals to imitate thus upholding originality and competitiveness.

Price. The company maintains the provision of high quality products and services at prices that meet affordability needs across the different incom...