AGL: An Electric Utility Dealing with Disruptive Innovation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AGL: An Electric Utility Dealing with Disruptive Innovation
AGL Energy, a long-time traditional energy supply company in Australia, was facing competition as alternative sources of energy, such as solar power and batteries, were taking root in both the marketplace and with energy-conscious homeowners. The trend of homeowners who opted to supply their own energy needs and go off the grid was described as a "death spiral" for utility companies. In response, AGL Energy appointed a new chief executive officer in 2015 to address concerns related to falling demand, customer retention, and unpredictable energy prices. With climate change issues pushing so-called green energy sources into the forefront, what were the strategic options that would ensure AGL Energy's continued presence as a leader in the energy industry? Tom Houghton is affiliated with Curtin University. Philip Sugai is affiliated with Doshisha University.
Swot Analysis of "AGL: An Electric Utility Dealing with Disruptive Innovation" written by Tom Houghton, Philip Sugai includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Agl Energy facing as an external strategic factors. Some of the topics covered in AGL: An Electric Utility Dealing with Disruptive Innovation case study are - Strategic Management Strategies, International business, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the AGL: An Electric Utility Dealing with Disruptive Innovation casestudy better are - – there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, increasing energy prices, challanges to central banks by blockchain based private currencies,
wage bills are increasing, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of AGL: An Electric Utility Dealing with Disruptive Innovation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AGL: An Electric Utility Dealing with Disruptive Innovation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Agl Energy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Agl Energy 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 AGL: An Electric Utility Dealing with Disruptive Innovation can be done for the following purposes –
1. Strategic planning using facts provided in AGL: An Electric Utility Dealing with Disruptive Innovation case study
2. Improving business portfolio management of Agl Energy
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Agl Energy
Strengths AGL: An Electric Utility Dealing with Disruptive Innovation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Agl Energy in AGL: An Electric Utility Dealing with Disruptive Innovation Harvard Business Review case study are -
Diverse revenue streams
– Agl Energy is present in almost all the verticals within the industry. This has provided firm in AGL: An Electric Utility Dealing with Disruptive Innovation 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.
Ability to lead change in Sales & Marketing field
– Agl Energy 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 Agl Energy in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Agl Energy has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Agl Energy 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.
High brand equity
– Agl Energy has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Agl Energy to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Agl Energy has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in AGL: An Electric Utility Dealing with Disruptive Innovation 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.
Learning organization
- Agl Energy 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 Agl Energy is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AGL: An Electric Utility Dealing with Disruptive Innovation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Agl Energy 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 AGL: An Electric Utility Dealing with Disruptive Innovation - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Agl Energy 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 Tom Houghton, Philip Sugai 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.
Highly skilled collaborators
– Agl Energy 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 AGL: An Electric Utility Dealing with Disruptive Innovation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Agl Energy is one of the most innovative firm in sector. Manager in AGL: An Electric Utility Dealing with Disruptive Innovation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Agl Energy in the sector have low bargaining power. AGL: An Electric Utility Dealing with Disruptive Innovation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Agl Energy to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Sales & Marketing industry
– AGL: An Electric Utility Dealing with Disruptive Innovation firm has clearly differentiated products in the market place. This has enabled Agl Energy to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Agl Energy to invest into research and development (R&D) and innovation.
Weaknesses AGL: An Electric Utility Dealing with Disruptive Innovation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AGL: An Electric Utility Dealing with Disruptive Innovation are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Agl Energy is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study AGL: An Electric Utility Dealing with Disruptive Innovation 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 bargaining power of channel partners
– Because of the regulatory requirements, Tom Houghton, Philip Sugai suggests that, Agl Energy 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study AGL: An Electric Utility Dealing with Disruptive Innovation, is just above the industry average. Agl Energy 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 AGL: An Electric Utility Dealing with Disruptive Innovation 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 Agl Energy 's lucrative customers.
Need for greater diversity
– Agl Energy has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Low market penetration in new markets
– Outside its home market of Agl Energy, firm in the HBR case study AGL: An Electric Utility Dealing with Disruptive Innovation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study AGL: An Electric Utility Dealing with Disruptive Innovation, it seems that the employees of Agl Energy 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 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 Agl Energy supply chain. Even after few cautionary changes mentioned in the HBR case study - AGL: An Electric Utility Dealing with Disruptive Innovation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Agl Energy vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Agl Energy 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 - AGL: An Electric Utility Dealing with Disruptive Innovation should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Agl Energy 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.
Slow decision making process
– As mentioned earlier in the report, Agl Energy 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. Agl Energy 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 AGL: An Electric Utility Dealing with Disruptive Innovation | 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 AGL: An Electric Utility Dealing with Disruptive Innovation are -
Developing new processes and practices
– Agl Energy can develop new processes and procedures in Sales & Marketing 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.
Learning at scale
– Online learning technologies has now opened space for Agl Energy 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.
Better consumer reach
– The expansion of the 5G network will help Agl Energy to increase its market reach. Agl Energy 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.
Loyalty marketing
– Agl Energy 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.
Using analytics as competitive advantage
– Agl Energy 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 AGL: An Electric Utility Dealing with Disruptive Innovation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Agl Energy to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Agl Energy 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 Agl Energy to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Agl Energy can use these opportunities to build new business models that can help the communities that Agl Energy operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Building a culture of innovation
– managers at Agl Energy 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 Sales & Marketing segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Agl Energy can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Agl Energy can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AGL: An Electric Utility Dealing with Disruptive Innovation 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Agl Energy in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
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 Agl Energy in the consumer business. Now Agl Energy can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Agl Energy 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, AGL: An Electric Utility Dealing with Disruptive Innovation, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats AGL: An Electric Utility Dealing with Disruptive Innovation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AGL: An Electric Utility Dealing with Disruptive Innovation are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study AGL: An Electric Utility Dealing with Disruptive Innovation, Agl Energy may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Regulatory challenges
– Agl Energy 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 Sales & Marketing industry regulations.
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.
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 Agl Energy business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Agl Energy can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Agl Energy 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.
Stagnating economy with rate increase
– Agl Energy 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Agl Energy with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Agl Energy is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Agl Energy
– 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 Agl Energy.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Agl Energy in the Sales & Marketing industry. The Sales & Marketing 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.
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 Agl Energy in the Sales & Marketing sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Agl Energy 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 AGL: An Electric Utility Dealing with Disruptive Innovation 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 AGL: An Electric Utility Dealing with Disruptive Innovation 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 AGL: An Electric Utility Dealing with Disruptive Innovation 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 AGL: An Electric Utility Dealing with Disruptive Innovation 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 AGL: An Electric Utility Dealing with Disruptive Innovation 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 Agl Energy needs to make to build a sustainable competitive advantage.
