Case Study Description of Alto Chemicals Europe (A)
Describes the revised marketing strategy for a commodity chemical and the resulting salesforce opposition that confronts a new marketing manager. The changes in the strategy aim for: margin improvement, new segmentation, centralized decision making, and pan-European optimization. A 1993 ECCH award winner. This is a revised version of an earlier case.
Swot Analysis of "Alto Chemicals Europe (A)" written by Kamran Kashani includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Revised Ecch facing as an external strategic factors. Some of the topics covered in Alto Chemicals Europe (A) case study are - Strategic Management Strategies, Leadership, Marketing, Organizational structure, Sales, Strategy execution and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Alto Chemicals Europe (A) casestudy better are - – supply chains are disrupted by pandemic , increasing energy prices, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, central banks are concerned over increasing inflation,
there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Alto Chemicals Europe (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Alto Chemicals Europe (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Revised Ecch, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Revised Ecch 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 Alto Chemicals Europe (A) can be done for the following purposes –
1. Strategic planning using facts provided in Alto Chemicals Europe (A) case study
2. Improving business portfolio management of Revised Ecch
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 Revised Ecch
Strengths Alto Chemicals Europe (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Revised Ecch in Alto Chemicals Europe (A) Harvard Business Review case study are -
Ability to recruit top talent
– Revised Ecch is one of the leading recruiters in the industry. Managers in the Alto Chemicals Europe (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Sales & Marketing industry
– Alto Chemicals Europe (A) firm has clearly differentiated products in the market place. This has enabled Revised Ecch to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Revised Ecch to invest into research and development (R&D) and innovation.
Ability to lead change in Sales & Marketing field
– Revised Ecch 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 Revised Ecch in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Revised Ecch 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 Alto Chemicals Europe (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Revised Ecch is present in almost all the verticals within the industry. This has provided firm in Alto Chemicals Europe (A) 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.
Training and development
– Revised Ecch has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Alto Chemicals Europe (A) 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.
Successful track record of launching new products
– Revised Ecch has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Revised Ecch 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
- Revised Ecch 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 Revised Ecch is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Alto Chemicals Europe (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Revised Ecch in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Revised Ecch 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 Alto Chemicals Europe (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Revised Ecch is one of the most innovative firm in sector. Manager in Alto Chemicals Europe (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Revised Ecch has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Revised Ecch to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Alto Chemicals Europe (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Alto Chemicals Europe (A) are -
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 Revised Ecch supply chain. Even after few cautionary changes mentioned in the HBR case study - Alto Chemicals Europe (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Revised Ecch vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Revised Ecch 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.
Interest costs
– Compare to the competition, Revised Ecch has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Revised Ecch is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Alto Chemicals Europe (A) 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 Alto Chemicals Europe (A), is just above the industry average. Revised Ecch 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.
Lack of clear differentiation of Revised Ecch products
– To increase the profitability and margins on the products, Revised Ecch needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Revised Ecch 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.
Increasing silos among functional specialists
– The organizational structure of Revised Ecch is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Revised Ecch needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Revised Ecch to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Revised Ecch 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. Revised Ecch 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.
Aligning sales with marketing
– It come across in the case study Alto Chemicals Europe (A) 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 Alto Chemicals Europe (A) can leverage the sales team experience to cultivate customer relationships as Revised Ecch is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Revised Ecch, firm in the HBR case study Alto Chemicals Europe (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Alto Chemicals Europe (A) | 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 Alto Chemicals Europe (A) are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Revised Ecch 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.
Leveraging digital technologies
– Revised Ecch 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.
Loyalty marketing
– Revised Ecch 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Revised Ecch 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, Alto Chemicals Europe (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Revised Ecch 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.
Buying journey improvements
– Revised Ecch can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Alto Chemicals Europe (A) 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Revised Ecch is facing challenges because of the dominance of functional experts in the organization. Alto Chemicals Europe (A) 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Revised Ecch can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Revised Ecch 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 Alto Chemicals Europe (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Revised Ecch to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Revised Ecch has opened avenues for new revenue streams for the organization in the industry. This can help Revised Ecch to build a more holistic ecosystem as suggested in the Alto Chemicals Europe (A) case study. Revised Ecch can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Revised Ecch 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Revised Ecch 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. Revised Ecch 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.
Developing new processes and practices
– Revised Ecch 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.
Threats Alto Chemicals Europe (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Alto Chemicals Europe (A) are -
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. Revised Ecch needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Revised Ecch 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 Alto Chemicals Europe (A) .
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.
Environmental challenges
– Revised Ecch 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. Revised Ecch can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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. Revised Ecch 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 Revised Ecch is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Revised Ecch.
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 Revised Ecch in the Sales & Marketing sector and impact the bottomline of the organization.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Alto Chemicals Europe (A), Revised Ecch 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 .
High dependence on third party suppliers
– Revised Ecch 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.
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 Revised Ecch business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Revised Ecch has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Revised Ecch needs to keep up with the evolution of technology in the Sales & Marketing 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.
Weighted SWOT Analysis of Alto Chemicals Europe (A) 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 Alto Chemicals Europe (A) 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 Alto Chemicals Europe (A) 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 Alto Chemicals Europe (A) 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 Alto Chemicals Europe (A) 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 Revised Ecch needs to make to build a sustainable competitive advantage.