Raffles Holdings Limited - Valuation of a Divestiture SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Raffles Holdings Limited - Valuation of a Divestiture
In 2005, CapitaLand announced the sale of the hotel business under its subsidiary Raffles Holdings Limited for US$1.45 billion. This included the sale of landmark Raffles Hotel as well as 40 other hotels, including the SwissA´tel international hotel chain. The case focuses on the financial and the strategic aspects of the sale from the perspective of CapitaLand and includes the following: a€¢ What should be an appropriate valuation for Raffles Holdings? a€¢ How should the value of intangible assets such as brand name be incorporated? a€¢ Was there strategic justification for CapitaLand to pursue a divestiture that would translate into loss of the iconic Raffles Hotel - a national monument of Singapore?
Swot Analysis of "Raffles Holdings Limited - Valuation of a Divestiture" written by Siriwan Chutikamoltham, Wilfred Chua includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Raffles Capitaland facing as an external strategic factors. Some of the topics covered in Raffles Holdings Limited - Valuation of a Divestiture case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Raffles Holdings Limited - Valuation of a Divestiture casestudy better are - – increasing commodity prices, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels,
increasing transportation and logistics costs, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Raffles Holdings Limited - Valuation of a Divestiture
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Raffles Holdings Limited - Valuation of a Divestiture case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Raffles Capitaland, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Raffles Capitaland 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 Raffles Holdings Limited - Valuation of a Divestiture can be done for the following purposes –
1. Strategic planning using facts provided in Raffles Holdings Limited - Valuation of a Divestiture case study
2. Improving business portfolio management of Raffles Capitaland
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 Raffles Capitaland
Strengths Raffles Holdings Limited - Valuation of a Divestiture | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Raffles Capitaland in Raffles Holdings Limited - Valuation of a Divestiture Harvard Business Review case study are -
High brand equity
– Raffles Capitaland has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Raffles Capitaland to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Raffles Capitaland 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 Raffles Holdings Limited - Valuation of a Divestiture - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Finance & Accounting field
– Raffles Capitaland 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 Raffles Capitaland in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Raffles Capitaland 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 Raffles Capitaland is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Raffles Holdings Limited - Valuation of a Divestiture Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Raffles Capitaland
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Raffles Capitaland does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Raffles Capitaland is present in almost all the verticals within the industry. This has provided firm in Raffles Holdings Limited - Valuation of a Divestiture 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.
Cross disciplinary teams
– Horizontal connected teams at the Raffles Capitaland 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.
Analytics focus
– Raffles Capitaland 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 Siriwan Chutikamoltham, Wilfred Chua 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Raffles Holdings Limited - Valuation of a Divestiture firm has clearly differentiated products in the market place. This has enabled Raffles Capitaland to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Raffles Capitaland to invest into research and development (R&D) and innovation.
Innovation driven organization
– Raffles Capitaland is one of the most innovative firm in sector. Manager in Raffles Holdings Limited - Valuation of a Divestiture Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Raffles Capitaland has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Raffles Capitaland 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.
Superior customer experience
– The customer experience strategy of Raffles Capitaland in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Raffles Holdings Limited - Valuation of a Divestiture | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Raffles Holdings Limited - Valuation of a Divestiture are -
Interest costs
– Compare to the competition, Raffles Capitaland 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.
High cash cycle compare to competitors
Raffles Capitaland 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Siriwan Chutikamoltham, Wilfred Chua suggests that, Raffles Capitaland 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Raffles Capitaland is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Raffles Holdings Limited - Valuation of a Divestiture can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As Raffles Holdings Limited - Valuation of a Divestiture HBR case study mentions - Raffles Capitaland 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.
Lack of clear differentiation of Raffles Capitaland products
– To increase the profitability and margins on the products, Raffles Capitaland needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Raffles Holdings Limited - Valuation of a Divestiture, is just above the industry average. Raffles Capitaland 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 Raffles Capitaland supply chain. Even after few cautionary changes mentioned in the HBR case study - Raffles Holdings Limited - Valuation of a Divestiture, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Raffles Capitaland vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Raffles Capitaland 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 - Raffles Holdings Limited - Valuation of a Divestiture should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Raffles Capitaland 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Raffles Holdings Limited - Valuation of a Divestiture, in the dynamic environment Raffles Capitaland has struggled to respond to the nimble upstart competition. Raffles Capitaland has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Raffles Holdings Limited - Valuation of a Divestiture | 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 Raffles Holdings Limited - Valuation of a Divestiture are -
Learning at scale
– Online learning technologies has now opened space for Raffles Capitaland 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.
Loyalty marketing
– Raffles Capitaland 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Raffles Capitaland is facing challenges because of the dominance of functional experts in the organization. Raffles Holdings Limited - Valuation of a Divestiture 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.
Building a culture of innovation
– managers at Raffles Capitaland 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.
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 Raffles Capitaland in the consumer business. Now Raffles Capitaland can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Raffles Capitaland can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Raffles Capitaland can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Raffles Capitaland 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. Raffles Capitaland 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.
Buying journey improvements
– Raffles Capitaland can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Raffles Holdings Limited - Valuation of a Divestiture 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Raffles Capitaland can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Raffles Holdings Limited - Valuation of a Divestiture, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Raffles Capitaland 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.
Leveraging digital technologies
– Raffles Capitaland 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Raffles Capitaland 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 Raffles Capitaland to hire the very best people irrespective of their geographical location.
Threats Raffles Holdings Limited - Valuation of a Divestiture External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Raffles Holdings Limited - Valuation of a Divestiture are -
Shortening product life cycle
– it is one of the major threat that Raffles Capitaland is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Raffles Capitaland 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
– Raffles Capitaland 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. Raffles Capitaland can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Raffles Capitaland needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Raffles Capitaland with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Raffles Capitaland 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.
Regulatory challenges
– Raffles Capitaland 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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. Raffles Capitaland can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Raffles Capitaland business can come under increasing regulations regarding data privacy, data security, etc.
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 Raffles Capitaland in the Finance & Accounting sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Raffles Holdings Limited - Valuation of a Divestiture, Raffles Capitaland 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 .
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. Raffles Capitaland 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.
Weighted SWOT Analysis of Raffles Holdings Limited - Valuation of a Divestiture 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 Raffles Holdings Limited - Valuation of a Divestiture 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 Raffles Holdings Limited - Valuation of a Divestiture 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 Raffles Holdings Limited - Valuation of a Divestiture 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 Raffles Holdings Limited - Valuation of a Divestiture 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 Raffles Capitaland needs to make to build a sustainable competitive advantage.
