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 - – increasing household debt because of falling income levels, increasing transportation and logistics costs, there is increasing trade war between United States & China, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy,
cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, 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 -
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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Amoco Bp digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Amoco Bp 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.
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.
Training and development
– Amoco Bp has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in BP Amoco (A): Policy Statement on the Use of Project Finance 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.
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.
Low bargaining power of suppliers
– Suppliers of Amoco Bp in the sector have low bargaining power. BP Amoco (A): Policy Statement on the Use of Project Finance has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Amoco Bp to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
Ability to lead change in Finance & Accounting field
– Amoco Bp 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 Amoco Bp in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Amoco Bp has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Amoco Bp 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.
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.
High switching costs
– The high switching costs that Amoco Bp 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.
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 -
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.
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.
No frontier risks strategy
– After analyzing the HBR case study BP Amoco (A): Policy Statement on the Use of Project Finance, 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.
Increasing silos among functional specialists
– The organizational structure of Amoco Bp is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Amoco Bp needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Amoco Bp to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study BP Amoco (A): Policy Statement on the Use of Project Finance, is just above the industry average. Amoco Bp needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High 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 Amoco Bp supply chain. Even after few cautionary changes mentioned in the HBR case study - BP Amoco (A): Policy Statement on the Use of Project Finance, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Amoco Bp vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Benjamin C. Esty, Michael Kane suggests that, Amoco Bp 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.
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.
High cash cycle compare to competitors
Amoco Bp 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.
Products dominated business model
– Even though Amoco Bp 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 - BP Amoco (A): Policy Statement on the Use of Project Finance should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Amoco Bp 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.
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 -
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.
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.
Developing new processes and practices
– Amoco Bp 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Amoco Bp 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.
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.
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.
Building a culture of innovation
– managers at Amoco Bp 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.
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.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Amoco Bp can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Amoco Bp can use these opportunities to build new business models that can help the communities that Amoco Bp operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Amoco Bp can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 -
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.
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. Amoco Bp needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Amoco Bp 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.
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.
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.
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.
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.
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 .
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.
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.
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 .
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 Amoco Bp business can come under increasing regulations regarding data privacy, data security, etc.
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.
