Group Functions at the Maersk Group SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Group Functions at the Maersk Group
In 2014, seven years after he was appointed CEO of the Danish shipping and oil conglomerate A.P. MA?ller Maersk (the Maersk Group), Nils Andersen was reexamining the size and role of corporate headquarters in the company he had reshaped as a "premium conglomerate." During his tenure, Andersen had divided what had previously been operated as almost a single entity into separate lines of business, each accountable for its own performance and expected to deal at arms-length with its "sister" businesses, while substantially reducing the size and functions of the corporate headquarters. But as the business units (BUs) and corporate headquarters adjusted to their new roles, new issues surfaced.
Swot Analysis of "Group Functions at the Maersk Group" written by David J. Collis, Matthew Shaffer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Maersk Andersen facing as an external strategic factors. Some of the topics covered in Group Functions at the Maersk Group case study are - Strategic Management Strategies, Organizational structure, Workspaces and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Group Functions at the Maersk Group casestudy better are - – increasing energy prices, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, increasing commodity prices, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion,
there is backlash against globalization, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Group Functions at the Maersk Group
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Group Functions at the Maersk Group case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Maersk Andersen, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Maersk Andersen 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 Group Functions at the Maersk Group can be done for the following purposes –
1. Strategic planning using facts provided in Group Functions at the Maersk Group case study
2. Improving business portfolio management of Maersk Andersen
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Maersk Andersen
Strengths Group Functions at the Maersk Group | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Maersk Andersen in Group Functions at the Maersk Group Harvard Business Review case study are -
Highly skilled collaborators
– Maersk Andersen 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 Group Functions at the Maersk Group HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Maersk Andersen 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 David J. Collis, Matthew Shaffer 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.
Effective Research and Development (R&D)
– Maersk Andersen 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 Group Functions at the Maersk Group - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Maersk Andersen has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Maersk Andersen to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Maersk Andersen in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Maersk Andersen is present in almost all the verticals within the industry. This has provided firm in Group Functions at the Maersk Group 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.
Innovation driven organization
– Maersk Andersen is one of the most innovative firm in sector. Manager in Group Functions at the Maersk Group 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 Maersk Andersen in the sector have low bargaining power. Group Functions at the Maersk Group has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Maersk Andersen to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Group Functions at the Maersk Group 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Group Functions at the Maersk Group firm has clearly differentiated products in the market place. This has enabled Maersk Andersen to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Maersk Andersen to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Maersk Andersen is one of the leading recruiters in the industry. Managers in the Group Functions at the Maersk Group are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Maersk Andersen is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Group Functions at the Maersk Group | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Group Functions at the Maersk Group 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 Maersk Andersen supply chain. Even after few cautionary changes mentioned in the HBR case study - Group Functions at the Maersk Group, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Maersk Andersen vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Group Functions at the Maersk Group, is just above the industry average. Maersk Andersen 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Group Functions at the Maersk Group, it seems that the employees of Maersk Andersen 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.
Skills based hiring
– The stress on hiring functional specialists at Maersk Andersen 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Group Functions at the Maersk Group, in the dynamic environment Maersk Andersen has struggled to respond to the nimble upstart competition. Maersk Andersen has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Maersk Andersen is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Group Functions at the Maersk Group can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Maersk Andersen is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Maersk Andersen needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Maersk Andersen to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Maersk Andersen products
– To increase the profitability and margins on the products, Maersk Andersen needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Maersk Andersen 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 - Group Functions at the Maersk Group should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Maersk Andersen 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.
High bargaining power of channel partners
– Because of the regulatory requirements, David J. Collis, Matthew Shaffer suggests that, Maersk Andersen 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.
Opportunities Group Functions at the Maersk Group | 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 Group Functions at the Maersk Group are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Maersk Andersen can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Maersk Andersen 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, Group Functions at the Maersk Group, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Maersk Andersen can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Maersk Andersen 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. Maersk Andersen 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
– Maersk Andersen can develop new processes and procedures in Strategy & Execution 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.
Building a culture of innovation
– managers at Maersk Andersen 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 Strategy & Execution segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Maersk Andersen can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Maersk Andersen 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.
Learning at scale
– Online learning technologies has now opened space for Maersk Andersen 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Maersk Andersen is facing challenges because of the dominance of functional experts in the organization. Group Functions at the Maersk Group 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Maersk Andersen can use these opportunities to build new business models that can help the communities that Maersk Andersen operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Maersk Andersen in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Maersk Andersen has opened avenues for new revenue streams for the organization in the industry. This can help Maersk Andersen to build a more holistic ecosystem as suggested in the Group Functions at the Maersk Group case study. Maersk Andersen can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Group Functions at the Maersk Group External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Group Functions at the Maersk Group are -
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. Maersk Andersen 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.
Environmental challenges
– Maersk Andersen 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. Maersk Andersen can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Consumer confidence and its impact on Maersk Andersen 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Group Functions at the Maersk Group, Maersk Andersen may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Stagnating economy with rate increase
– Maersk Andersen 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Maersk Andersen 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 Group Functions at the Maersk Group .
High dependence on third party suppliers
– Maersk Andersen 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.
Regulatory challenges
– Maersk Andersen 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 Strategy & Execution industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Maersk Andersen with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Maersk Andersen needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
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 Maersk Andersen in the Strategy & Execution sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Maersk Andersen has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Maersk Andersen needs to keep up with the evolution of technology in the Strategy & Execution 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 Group Functions at the Maersk Group 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 Group Functions at the Maersk Group 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 Group Functions at the Maersk Group 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 Group Functions at the Maersk Group 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 Group Functions at the Maersk Group 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 Maersk Andersen needs to make to build a sustainable competitive advantage.