Case Study Description of Kaiser Steel Corp.--1950
Examines Kaiser Steel's initial equity offering in 1950. The first case in a sequence that will trace the history of corporate restructurings that occurred 30 to 40 years later, in the 1980s. Subsequent cases examine foreign competition and labor unrest, hostile takeover attempts and LBOs, and bankruptcy and reorganization. Students are asked to recommend a recapitalization for Kaiser Steel in the context of steel industry competitive dynamics, Kaiser's ownership structure, and the U.S. capital markets in 1950.
Authors :: Timothy A. Luehrman, William T. Schiano
Swot Analysis of "Kaiser Steel Corp.--1950" written by Timothy A. Luehrman, William T. Schiano includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that 1950 Kaiser facing as an external strategic factors. Some of the topics covered in Kaiser Steel Corp.--1950 case study are - Strategic Management Strategies, Business history, Competition, Financial management, Financial markets, IPO, Labor, Mergers & acquisitions, Organizational structure, Reorganization and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Kaiser Steel Corp.--1950 casestudy better are - – supply chains are disrupted by pandemic , geopolitical disruptions, talent flight as more people leaving formal jobs, there is backlash against globalization, challanges to central banks by blockchain based private currencies, wage bills are increasing, increasing commodity prices,
increasing transportation and logistics costs, increasing energy prices, etc
Introduction to SWOT Analysis of Kaiser Steel Corp.--1950
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Kaiser Steel Corp.--1950 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the 1950 Kaiser, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which 1950 Kaiser 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 Kaiser Steel Corp.--1950 can be done for the following purposes –
1. Strategic planning using facts provided in Kaiser Steel Corp.--1950 case study
2. Improving business portfolio management of 1950 Kaiser
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 1950 Kaiser
Strengths Kaiser Steel Corp.--1950 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of 1950 Kaiser in Kaiser Steel Corp.--1950 Harvard Business Review case study are -
Strong track record of project management
– 1950 Kaiser is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Finance & Accounting field
– 1950 Kaiser 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 1950 Kaiser in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- 1950 Kaiser 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 1950 Kaiser is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Kaiser Steel Corp.--1950 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– 1950 Kaiser is one of the leading recruiters in the industry. Managers in the Kaiser Steel Corp.--1950 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– 1950 Kaiser 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 Kaiser Steel Corp.--1950 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that 1950 Kaiser 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.
Effective Research and Development (R&D)
– 1950 Kaiser 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 Kaiser Steel Corp.--1950 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of 1950 Kaiser in the sector have low bargaining power. Kaiser Steel Corp.--1950 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps 1950 Kaiser to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Kaiser Steel Corp.--1950 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.
High brand equity
– 1950 Kaiser has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled 1950 Kaiser to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of 1950 Kaiser
– The covid-19 pandemic has put organizational resilience at the centre of everthing that 1950 Kaiser does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– 1950 Kaiser is present in almost all the verticals within the industry. This has provided firm in Kaiser Steel Corp.--1950 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.
Weaknesses Kaiser Steel Corp.--1950 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kaiser Steel Corp.--1950 are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, 1950 Kaiser is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Kaiser Steel Corp.--1950 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Kaiser Steel Corp.--1950, is just above the industry average. 1950 Kaiser 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 operating costs
– Compare to the competitors, firm in the HBR case study Kaiser Steel Corp.--1950 has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract 1950 Kaiser 's lucrative customers.
Slow to strategic competitive environment developments
– As Kaiser Steel Corp.--1950 HBR case study mentions - 1950 Kaiser 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.
Products dominated business model
– Even though 1950 Kaiser 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 - Kaiser Steel Corp.--1950 should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, 1950 Kaiser 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Kaiser Steel Corp.--1950, it seems that the employees of 1950 Kaiser 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.
No frontier risks strategy
– After analyzing the HBR case study Kaiser Steel Corp.--1950, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– It come across in the case study Kaiser Steel Corp.--1950 that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Kaiser Steel Corp.--1950 can leverage the sales team experience to cultivate customer relationships as 1950 Kaiser is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of 1950 Kaiser is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. 1950 Kaiser needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help 1950 Kaiser to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, 1950 Kaiser 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. 1950 Kaiser 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 Kaiser Steel Corp.--1950 | 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 Kaiser Steel Corp.--1950 are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for 1950 Kaiser 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. 1950 Kaiser can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. 1950 Kaiser can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– 1950 Kaiser 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects 1950 Kaiser can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of 1950 Kaiser has opened avenues for new revenue streams for the organization in the industry. This can help 1950 Kaiser to build a more holistic ecosystem as suggested in the Kaiser Steel Corp.--1950 case study. 1950 Kaiser can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help 1950 Kaiser to increase its market reach. 1950 Kaiser will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Learning at scale
– Online learning technologies has now opened space for 1950 Kaiser 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.
Using analytics as competitive advantage
– 1950 Kaiser 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 Kaiser Steel Corp.--1950 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help 1950 Kaiser to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– 1950 Kaiser 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.
Loyalty marketing
– 1950 Kaiser 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.
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 1950 Kaiser 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, 1950 Kaiser is facing challenges because of the dominance of functional experts in the organization. Kaiser Steel Corp.--1950 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 Kaiser Steel Corp.--1950 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Kaiser Steel Corp.--1950 are -
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.
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. 1950 Kaiser 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.
Shortening product life cycle
– it is one of the major threat that 1950 Kaiser is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. 1950 Kaiser needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Regulatory challenges
– 1950 Kaiser 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, 1950 Kaiser 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 Kaiser Steel Corp.--1950 .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Kaiser Steel Corp.--1950, 1950 Kaiser 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 .
Stagnating economy with rate increase
– 1950 Kaiser 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.
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 1950 Kaiser in the Finance & Accounting sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents 1950 Kaiser with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 1950 Kaiser.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for 1950 Kaiser 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.
Increasing wage structure of 1950 Kaiser
– 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 1950 Kaiser.
Weighted SWOT Analysis of Kaiser Steel Corp.--1950 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 Kaiser Steel Corp.--1950 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 Kaiser Steel Corp.--1950 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 Kaiser Steel Corp.--1950 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 Kaiser Steel Corp.--1950 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 1950 Kaiser needs to make to build a sustainable competitive advantage.