BP Amoco (A): Policy Statement on the Use of Project Finance SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of BP Amoco (A): Policy Statement on the Use of Project Finance
Following the BP/Amoco merger in December 1998, CFO David Watson asked Bill Young to recommend when and under what circumstances the firm should use external project finance instead of internal corporate funds to finance new capital investments. As part of this assignment, Young and his team must review each firm's current policy regarding project finance and evaluate the various rationales used to justify its use. Following this review, his team created a new policy statement recommending that BP Amoco finance capital expenditures using corporate funds except in three special circumstances: mega projects, projects in politically volatile areas, and joint ventures with heterogeneous partners. Whether the general rule of using corporate funds and whether the specific exceptions to the rule are appropriate for the merged entity are subjects for class discussion.
Swot Analysis of "BP Amoco (A): Policy Statement on the Use of Project Finance" written by Benjamin C. Esty, Michael Kane includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Amoco Bp facing as an external strategic factors. Some of the topics covered in BP Amoco (A): Policy Statement on the Use of Project Finance case study are - Strategic Management Strategies, Costs, Mergers & acquisitions, Project management, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the BP Amoco (A): Policy Statement on the Use of Project Finance casestudy better are - – technology disruption, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs,
challanges to central banks by blockchain based private currencies, there is backlash against globalization, etc
Introduction to SWOT Analysis of BP Amoco (A): Policy Statement on the Use of Project Finance
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in BP Amoco (A): Policy Statement on the Use of Project Finance case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Amoco Bp, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Amoco Bp 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 BP Amoco (A): Policy Statement on the Use of Project Finance can be done for the following purposes –
1. Strategic planning using facts provided in BP Amoco (A): Policy Statement on the Use of Project Finance case study
2. Improving business portfolio management of Amoco Bp
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 Amoco Bp
Strengths BP Amoco (A): Policy Statement on the Use of Project Finance | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Amoco Bp in BP Amoco (A): Policy Statement on the Use of Project Finance Harvard Business Review case study are -
Strong track record of project management
– Amoco Bp is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Finance & Accounting industry
– BP Amoco (A): Policy Statement on the Use of Project Finance firm has clearly differentiated products in the market place. This has enabled Amoco Bp to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Amoco Bp to invest into research and development (R&D) and innovation.
Organizational Resilience of Amoco Bp
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Amoco Bp does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the BP Amoco (A): Policy Statement on the Use of Project Finance 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.
Learning organization
- Amoco Bp 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 Amoco Bp is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in BP Amoco (A): Policy Statement on the Use of Project Finance Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Amoco Bp in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Amoco Bp 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 BP Amoco (A): Policy Statement on the Use of Project Finance HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Amoco Bp has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Amoco Bp to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Amoco Bp 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 Benjamin C. Esty, Michael Kane 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.
Diverse revenue streams
– Amoco Bp is present in almost all the verticals within the industry. This has provided firm in BP Amoco (A): Policy Statement on the Use of Project Finance 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
– Amoco Bp is one of the most innovative firm in sector. Manager in BP Amoco (A): Policy Statement on the Use of Project Finance Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Amoco Bp are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses BP Amoco (A): Policy Statement on the Use of Project Finance | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of BP Amoco (A): Policy Statement on the Use of Project Finance are -
Interest costs
– Compare to the competition, Amoco Bp 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.
Need for greater diversity
– Amoco Bp 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.
High operating costs
– Compare to the competitors, firm in the HBR case study BP Amoco (A): Policy Statement on the Use of Project Finance 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 Amoco Bp 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Amoco Bp 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Amoco Bp is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study BP Amoco (A): Policy Statement on the Use of Project Finance can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As BP Amoco (A): Policy Statement on the Use of Project Finance HBR case study mentions - Amoco Bp 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.
Aligning sales with marketing
– It come across in the case study BP Amoco (A): Policy Statement on the Use of Project Finance 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 BP Amoco (A): Policy Statement on the Use of Project Finance can leverage the sales team experience to cultivate customer relationships as Amoco Bp is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Amoco Bp 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study BP Amoco (A): Policy Statement on the Use of Project Finance, in the dynamic environment Amoco Bp has struggled to respond to the nimble upstart competition. Amoco Bp has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study BP Amoco (A): Policy Statement on the Use of Project Finance, it seems that the employees of Amoco Bp 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.
Lack of clear differentiation of Amoco Bp products
– To increase the profitability and margins on the products, Amoco Bp needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities BP Amoco (A): Policy Statement on the Use of Project Finance | 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 BP Amoco (A): Policy Statement on the Use of Project Finance are -
Buying journey improvements
– Amoco Bp can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. BP Amoco (A): Policy Statement on the Use of Project Finance 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.
Better consumer reach
– The expansion of the 5G network will help Amoco Bp to increase its market reach. Amoco Bp 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Amoco Bp 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 Amoco Bp to hire the very best people irrespective of their geographical location.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Amoco Bp to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Amoco Bp is facing challenges because of the dominance of functional experts in the organization. BP Amoco (A): Policy Statement on the Use of Project Finance 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.
Using analytics as competitive advantage
– Amoco Bp 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 BP Amoco (A): Policy Statement on the Use of Project Finance - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Amoco Bp to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Amoco Bp 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.
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. Amoco Bp can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Amoco Bp 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.
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 Amoco Bp in the consumer business. Now Amoco Bp can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Amoco Bp has opened avenues for new revenue streams for the organization in the industry. This can help Amoco Bp to build a more holistic ecosystem as suggested in the BP Amoco (A): Policy Statement on the Use of Project Finance case study. Amoco Bp can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Amoco Bp 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. Amoco Bp 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Amoco Bp 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, BP Amoco (A): Policy Statement on the Use of Project Finance, 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 BP Amoco (A): Policy Statement on the Use of Project Finance External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study BP Amoco (A): Policy Statement on the Use of Project Finance 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. Amoco Bp 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study BP Amoco (A): Policy Statement on the Use of Project Finance, Amoco Bp may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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 Amoco Bp.
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. Amoco Bp can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Amoco Bp in the Finance & Accounting sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Amoco Bp has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Amoco Bp 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.
Regulatory challenges
– Amoco Bp needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Shortening product life cycle
– it is one of the major threat that Amoco Bp is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Amoco Bp
– 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 Amoco Bp.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Amoco Bp 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 BP Amoco (A): Policy Statement on the Use of Project Finance .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Amoco Bp with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Amoco Bp 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.
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.
Weighted SWOT Analysis of BP Amoco (A): Policy Statement on the Use of Project Finance 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 BP Amoco (A): Policy Statement on the Use of Project Finance 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 BP Amoco (A): Policy Statement on the Use of Project Finance 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 BP Amoco (A): Policy Statement on the Use of Project Finance 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 BP Amoco (A): Policy Statement on the Use of Project Finance 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 Amoco Bp needs to make to build a sustainable competitive advantage.