Human Resources at the AES Corp.: The Case of the Missing Department SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Human Resources at the AES Corp.: The Case of the Missing Department
AES develops and operates electric power plants all over the world, and by late 1996, has approximately 20,000 employees. But, the corporation has no human resources staff, either at corporate headquarters in Arlington, VA, or in any of its operating facilities. Moreover, the company has very little centralized staff at all--little or no strategic planning, no environmental department, and almost no legal staff. The question is: Could and should the company continue to operate in this same way, with little specialized staff, as it continues to expand and geographically diversify? Another question is: How had the organization been able to be so successful without developing and relying on specialized expertise?
Authors :: Jeffrey Pfeffer
Topics :: Organizational Development
Tags :: Human resource management, Leading teams, Organizational structure, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "Human Resources at the AES Corp.: The Case of the Missing Department" written by Jeffrey Pfeffer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Staff Aes facing as an external strategic factors. Some of the topics covered in Human Resources at the AES Corp.: The Case of the Missing Department case study are - Strategic Management Strategies, Human resource management, Leading teams, Organizational structure and Organizational Development.
Some of the macro environment factors that can be used to understand the Human Resources at the AES Corp.: The Case of the Missing Department casestudy better are - – central banks are concerned over increasing inflation, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, increasing energy prices, increasing transportation and logistics costs,
competitive advantages are harder to sustain because of technology dispersion, technology disruption, etc
Introduction to SWOT Analysis of Human Resources at the AES Corp.: The Case of the Missing Department
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Human Resources at the AES Corp.: The Case of the Missing Department case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Staff Aes, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Staff Aes 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 Human Resources at the AES Corp.: The Case of the Missing Department can be done for the following purposes –
1. Strategic planning using facts provided in Human Resources at the AES Corp.: The Case of the Missing Department case study
2. Improving business portfolio management of Staff Aes
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Staff Aes
Strengths Human Resources at the AES Corp.: The Case of the Missing Department | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Staff Aes in Human Resources at the AES Corp.: The Case of the Missing Department Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Staff Aes in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Staff Aes is present in almost all the verticals within the industry. This has provided firm in Human Resources at the AES Corp.: The Case of the Missing Department 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.
Innovation driven organization
– Staff Aes is one of the most innovative firm in sector. Manager in Human Resources at the AES Corp.: The Case of the Missing Department Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Staff Aes has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Staff Aes to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Staff Aes 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.
Highly skilled collaborators
– Staff Aes 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 Human Resources at the AES Corp.: The Case of the Missing Department HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Organizational Development field
– Staff Aes 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 Staff Aes in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Staff Aes is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Staff Aes 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 Human Resources at the AES Corp.: The Case of the Missing Department - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Staff Aes
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Staff Aes does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Organizational Development industry
– Human Resources at the AES Corp.: The Case of the Missing Department firm has clearly differentiated products in the market place. This has enabled Staff Aes to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Staff Aes to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Staff Aes 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.
Weaknesses Human Resources at the AES Corp.: The Case of the Missing Department | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Human Resources at the AES Corp.: The Case of the Missing Department are -
Low market penetration in new markets
– Outside its home market of Staff Aes, firm in the HBR case study Human Resources at the AES Corp.: The Case of the Missing Department needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Staff Aes 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.
High cash cycle compare to competitors
Staff Aes 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.
Capital Spending Reduction
– Even during the low interest decade, Staff Aes 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Human Resources at the AES Corp.: The Case of the Missing Department, it seems that the employees of Staff Aes 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.
Products dominated business model
– Even though Staff Aes 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 - Human Resources at the AES Corp.: The Case of the Missing Department should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Staff Aes 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.
Slow decision making process
– As mentioned earlier in the report, Staff Aes has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Staff Aes even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High bargaining power of channel partners
– Because of the regulatory requirements, Jeffrey Pfeffer suggests that, Staff Aes 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Human Resources at the AES Corp.: The Case of the Missing Department, in the dynamic environment Staff Aes has struggled to respond to the nimble upstart competition. Staff Aes has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Staff Aes supply chain. Even after few cautionary changes mentioned in the HBR case study - Human Resources at the AES Corp.: The Case of the Missing Department, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Staff Aes vulnerable to further global disruptions in South East Asia.
Opportunities Human Resources at the AES Corp.: The Case of the Missing Department | 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 Human Resources at the AES Corp.: The Case of the Missing Department are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Staff Aes in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Staff Aes 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Staff Aes 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 Staff Aes to hire the very best people irrespective of their geographical location.
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 Staff Aes in the consumer business. Now Staff Aes can target international markets with far fewer capital restrictions requirements than the existing system.
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. Staff Aes can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Staff Aes 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.
Developing new processes and practices
– Staff Aes can develop new processes and procedures in Organizational Development 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.
Loyalty marketing
– Staff Aes 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Staff Aes can use these opportunities to build new business models that can help the communities that Staff Aes operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Building a culture of innovation
– managers at Staff Aes 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 Organizational Development segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Staff Aes can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Staff Aes 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 Human Resources at the AES Corp.: The Case of the Missing Department - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Staff Aes 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, Staff Aes is facing challenges because of the dominance of functional experts in the organization. Human Resources at the AES Corp.: The Case of the Missing Department 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.
Threats Human Resources at the AES Corp.: The Case of the Missing Department External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Human Resources at the AES Corp.: The Case of the Missing Department 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 Staff Aes business can come under increasing regulations regarding data privacy, data security, etc.
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. Staff Aes 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.
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.
Increasing wage structure of Staff Aes
– 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 Staff Aes.
Environmental challenges
– Staff Aes 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. Staff Aes can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Shortening product life cycle
– it is one of the major threat that Staff Aes is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Staff Aes has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Staff Aes needs to keep up with the evolution of technology in the Organizational Development 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.
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 Staff Aes in the Organizational Development sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Staff Aes 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 Human Resources at the AES Corp.: The Case of the Missing Department .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Staff Aes with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Staff Aes 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.
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. Staff Aes needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Staff Aes 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 Human Resources at the AES Corp.: The Case of the Missing Department 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 Human Resources at the AES Corp.: The Case of the Missing Department 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 Human Resources at the AES Corp.: The Case of the Missing Department 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 Human Resources at the AES Corp.: The Case of the Missing Department 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 Human Resources at the AES Corp.: The Case of the Missing Department 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 Staff Aes needs to make to build a sustainable competitive advantage.