Case Study Description of Privatization of Rhone-Poulenc--1993
In mid-1993, representatives of Rhone-Poulenc, a leading nationalized French firm, worked with the French government to plan the imminent privatization of the firm. One aspect of the privatization was to create incentives for employees to buy and hold shares in the firm. A partial privatization earlier in 1993 proved that workers were reluctant to hold equities, even after receiving discounts and subsidized financing. The key financial officers of the firm received a proposal from Bankers Trust that would offer employees a unique investment in the firm, which might increase employee participation in the share offering. This alternative would guarantee employees a minimum rate of return yet allow them to enjoy appreciation of the firm's shares. The financial officers have to decide whether to propose this employee stock ownership alternative to the French government and to Rhone-Poulenc's board for inclusion in the forthcoming privatization.
Swot Analysis of "Privatization of Rhone-Poulenc--1993" written by Donald S. Collat, Peter Tufano includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Privatization Rhone facing as an external strategic factors. Some of the topics covered in Privatization of Rhone-Poulenc--1993 case study are - Strategic Management Strategies, Financial analysis, Financial management, Financial markets, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Privatization of Rhone-Poulenc--1993 casestudy better are - – increasing transportation and logistics costs, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, there is backlash against globalization, increasing household debt because of falling income levels,
talent flight as more people leaving formal jobs, increasing commodity prices, etc
Introduction to SWOT Analysis of Privatization of Rhone-Poulenc--1993
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Privatization of Rhone-Poulenc--1993 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Privatization Rhone, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Privatization Rhone 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 Privatization of Rhone-Poulenc--1993 can be done for the following purposes –
1. Strategic planning using facts provided in Privatization of Rhone-Poulenc--1993 case study
2. Improving business portfolio management of Privatization Rhone
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 Privatization Rhone
Strengths Privatization of Rhone-Poulenc--1993 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Privatization Rhone in Privatization of Rhone-Poulenc--1993 Harvard Business Review case study are -
Learning organization
- Privatization Rhone 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 Privatization Rhone is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Privatization of Rhone-Poulenc--1993 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Privatization Rhone 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 Privatization of Rhone-Poulenc--1993 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Privatization Rhone has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Privatization of Rhone-Poulenc--1993 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.
Organizational Resilience of Privatization Rhone
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Privatization Rhone does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Privatization Rhone digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Privatization Rhone 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.
Ability to recruit top talent
– Privatization Rhone is one of the leading recruiters in the industry. Managers in the Privatization of Rhone-Poulenc--1993 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Privatization of Rhone-Poulenc--1993 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.
Low bargaining power of suppliers
– Suppliers of Privatization Rhone in the sector have low bargaining power. Privatization of Rhone-Poulenc--1993 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Privatization Rhone to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Privatization Rhone 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.
Superior customer experience
– The customer experience strategy of Privatization Rhone in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Privatization Rhone has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Privatization Rhone 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.
Analytics focus
– Privatization Rhone 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 Donald S. Collat, Peter Tufano 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.
Weaknesses Privatization of Rhone-Poulenc--1993 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Privatization of Rhone-Poulenc--1993 are -
Aligning sales with marketing
– It come across in the case study Privatization of Rhone-Poulenc--1993 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 Privatization of Rhone-Poulenc--1993 can leverage the sales team experience to cultivate customer relationships as Privatization Rhone is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Privatization of Rhone-Poulenc--1993, 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Privatization Rhone is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Privatization of Rhone-Poulenc--1993 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, Donald S. Collat, Peter Tufano suggests that, Privatization Rhone 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.
Capital Spending Reduction
– Even during the low interest decade, Privatization Rhone has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Workers concerns about automation
– As automation is fast increasing in the segment, Privatization Rhone 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.
Slow to strategic competitive environment developments
– As Privatization of Rhone-Poulenc--1993 HBR case study mentions - Privatization Rhone 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Privatization of Rhone-Poulenc--1993, is just above the industry average. Privatization Rhone 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.
Slow decision making process
– As mentioned earlier in the report, Privatization Rhone 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. Privatization Rhone 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.
High cash cycle compare to competitors
Privatization Rhone has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of Privatization Rhone is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Privatization Rhone needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Privatization Rhone to focus more on services rather than just following the product oriented approach.
Opportunities Privatization of Rhone-Poulenc--1993 | 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 Privatization of Rhone-Poulenc--1993 are -
Building a culture of innovation
– managers at Privatization Rhone can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Privatization Rhone in the consumer business. Now Privatization Rhone can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Privatization Rhone 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. Privatization Rhone 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.
Learning at scale
– Online learning technologies has now opened space for Privatization Rhone 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 Privatization Rhone to increase its market reach. Privatization Rhone 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Privatization Rhone 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.
Manufacturing automation
– Privatization Rhone 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.
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. Privatization Rhone can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Privatization Rhone 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.
Using analytics as competitive advantage
– Privatization Rhone 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 Privatization of Rhone-Poulenc--1993 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Privatization Rhone to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Privatization Rhone can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Privatization Rhone can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Privatization Rhone can use these opportunities to build new business models that can help the communities that Privatization Rhone operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Threats Privatization of Rhone-Poulenc--1993 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Privatization of Rhone-Poulenc--1993 are -
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.
Shortening product life cycle
– it is one of the major threat that Privatization Rhone is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Privatization Rhone in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing wage structure of Privatization Rhone
– 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 Privatization Rhone.
Technology acceleration in Forth Industrial Revolution
– Privatization Rhone has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Privatization Rhone 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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Privatization Rhone can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Privatization Rhone.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Privatization Rhone 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.
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.
Consumer confidence and its impact on Privatization Rhone demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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 Privatization Rhone business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Privatization Rhone 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.
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. Privatization Rhone needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Privatization of Rhone-Poulenc--1993 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 Privatization of Rhone-Poulenc--1993 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 Privatization of Rhone-Poulenc--1993 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 Privatization of Rhone-Poulenc--1993 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 Privatization of Rhone-Poulenc--1993 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 Privatization Rhone needs to make to build a sustainable competitive advantage.
