Case Study Description of Premier Foods Plc: Interest Rate Swaps
A vice-president of a hedge fund must determine whether his fund will take a 5 per cent equity stake in Premier Foods Plc (Premier). At the time of the case, Premier, a publicly listed U.K. food and beverage company, was heavily indebted following a period of aggressive acquisition growth. Moreover, Premier had issued interest rate swaps on the majority of its debt. As the financial crisis unraveled, interest rates dramatically declined, and Premier's interest rate swaps appeared to be further draining the firm. Against this backdrop, the case sets its ultimate objective, which is to simulate the vice-president's analysis of the firm's debt, interest rate swaps, caps and floors before deciding whether to invest in Premier.
Swot Analysis of "Premier Foods Plc: Interest Rate Swaps" written by Jumana Zahalka, Anand Srinivasan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Premier Swaps facing as an external strategic factors. Some of the topics covered in Premier Foods Plc: Interest Rate Swaps case study are - Strategic Management Strategies, Financial markets, International business, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Premier Foods Plc: Interest Rate Swaps casestudy better are - – challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, there is increasing trade war between United States & China, 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%,
central banks are concerned over increasing inflation, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Premier Foods Plc: Interest Rate Swaps
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Premier Foods Plc: Interest Rate Swaps case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Premier Swaps, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Premier Swaps 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 Premier Foods Plc: Interest Rate Swaps can be done for the following purposes –
1. Strategic planning using facts provided in Premier Foods Plc: Interest Rate Swaps case study
2. Improving business portfolio management of Premier Swaps
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 Premier Swaps
Strengths Premier Foods Plc: Interest Rate Swaps | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Premier Swaps in Premier Foods Plc: Interest Rate Swaps Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Premier Swaps 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.
Effective Research and Development (R&D)
– Premier Swaps 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 Premier Foods Plc: Interest Rate Swaps - 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
– Premier Swaps 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 Premier Swaps in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Premier Swaps is one of the most innovative firm in sector. Manager in Premier Foods Plc: Interest Rate Swaps Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Premier Swaps digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Premier Swaps 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.
Organizational Resilience of Premier Swaps
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Premier Swaps does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Premier Swaps 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 Jumana Zahalka, Anand Srinivasan 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.
Ability to recruit top talent
– Premier Swaps is one of the leading recruiters in the industry. Managers in the Premier Foods Plc: Interest Rate Swaps are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Premier Swaps has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Premier Foods Plc: Interest Rate Swaps 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.
Operational resilience
– The operational resilience strategy in the Premier Foods Plc: Interest Rate Swaps Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Successful track record of launching new products
– Premier Swaps has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Premier Swaps 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.
Learning organization
- Premier Swaps 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 Premier Swaps is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Premier Foods Plc: Interest Rate Swaps Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Premier Foods Plc: Interest Rate Swaps | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Premier Foods Plc: Interest Rate Swaps are -
Skills based hiring
– The stress on hiring functional specialists at Premier Swaps 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Premier Swaps 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.
Lack of clear differentiation of Premier Swaps products
– To increase the profitability and margins on the products, Premier Swaps needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Jumana Zahalka, Anand Srinivasan suggests that, Premier Swaps 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.
Interest costs
– Compare to the competition, Premier Swaps 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Premier Foods Plc: Interest Rate Swaps, in the dynamic environment Premier Swaps has struggled to respond to the nimble upstart competition. Premier Swaps has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Premier Swaps is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Premier Foods Plc: Interest Rate Swaps 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 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 Premier Swaps supply chain. Even after few cautionary changes mentioned in the HBR case study - Premier Foods Plc: Interest Rate Swaps, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Premier Swaps vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Premier Foods Plc: Interest Rate Swaps, it seems that the employees of Premier Swaps 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Premier Foods Plc: Interest Rate Swaps 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 Premier Swaps has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Premier Swaps 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. Premier Swaps 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.
Opportunities Premier Foods Plc: Interest Rate Swaps | 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 Premier Foods Plc: Interest Rate Swaps are -
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. Premier Swaps can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Premier Swaps 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 Premier Foods Plc: Interest Rate Swaps - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Premier Swaps to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Premier Swaps 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, Premier Foods Plc: Interest Rate Swaps, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Premier Swaps 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Premier Swaps 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 Premier Swaps to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Premier Swaps has opened avenues for new revenue streams for the organization in the industry. This can help Premier Swaps to build a more holistic ecosystem as suggested in the Premier Foods Plc: Interest Rate Swaps case study. Premier Swaps can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Premier Swaps 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.
Learning at scale
– Online learning technologies has now opened space for Premier Swaps 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Premier Swaps can use these opportunities to build new business models that can help the communities that Premier Swaps operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Manufacturing automation
– Premier Swaps 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Premier Swaps 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.
Leveraging digital technologies
– Premier Swaps 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.
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 Premier Swaps in the consumer business. Now Premier Swaps can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Premier Foods Plc: Interest Rate Swaps External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Premier Foods Plc: Interest Rate Swaps are -
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 Premier Swaps in the Finance & Accounting sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Premier Swaps 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.
Shortening product life cycle
– it is one of the major threat that Premier Swaps is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Premier Swaps 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 Premier Foods Plc: Interest Rate Swaps .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Premier Foods Plc: Interest Rate Swaps, Premier Swaps 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 .
Regulatory challenges
– Premier Swaps 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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Premier Swaps.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Premier Swaps with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Premier Swaps has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Premier Swaps needs to keep up with the evolution of technology in the Finance & Accounting 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.
High dependence on third party suppliers
– Premier Swaps 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 Premier Swaps 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.
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 Premier Swaps business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Premier Swaps
– 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 Premier Swaps.
Weighted SWOT Analysis of Premier Foods Plc: Interest Rate Swaps 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 Premier Foods Plc: Interest Rate Swaps 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 Premier Foods Plc: Interest Rate Swaps 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 Premier Foods Plc: Interest Rate Swaps 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 Premier Foods Plc: Interest Rate Swaps 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 Premier Swaps needs to make to build a sustainable competitive advantage.