The Offshore Drilling Industry in 2011 SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Offshore Drilling Industry in 2011
To maximize their effectiveness, color cases should be printed in color.After booming in 2007 and early 2008, the offshore drilling industry slumps in 2009. Lower oil prices lead oil companies to reduce drilling budgets, and rig utilization falls from essentially 100% to 70% in some markets. Day rates--the prices paid for a rig's services--fall by as much as 68%. The case illustrates how supply and demand work together to determine prices and utilization in the short run, as well as how long-run supply is determined in an industry where capacity additions take several years. Also describes how advances in deep-water drilling technology are changing industry structure.
Authors :: Ramon Casadesus-Masanell, Kenneth Corts, Joseph McElroy
Swot Analysis of "The Offshore Drilling Industry in 2011" written by Ramon Casadesus-Masanell, Kenneth Corts, Joseph McElroy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Drilling Offshore facing as an external strategic factors. Some of the topics covered in The Offshore Drilling Industry in 2011 case study are - Strategic Management Strategies, Competitive strategy, Costs, Economy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the The Offshore Drilling Industry in 2011 casestudy better are - – there is increasing trade war between United States & China, there is backlash against globalization, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies,
talent flight as more people leaving formal jobs, increasing energy prices, etc
Introduction to SWOT Analysis of The Offshore Drilling Industry in 2011
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Offshore Drilling Industry in 2011 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Drilling Offshore, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Drilling Offshore 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 The Offshore Drilling Industry in 2011 can be done for the following purposes –
1. Strategic planning using facts provided in The Offshore Drilling Industry in 2011 case study
2. Improving business portfolio management of Drilling Offshore
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 Drilling Offshore
Strengths The Offshore Drilling Industry in 2011 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Drilling Offshore in The Offshore Drilling Industry in 2011 Harvard Business Review case study are -
Diverse revenue streams
– Drilling Offshore is present in almost all the verticals within the industry. This has provided firm in The Offshore Drilling Industry in 2011 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.
Analytics focus
– Drilling Offshore 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 Ramon Casadesus-Masanell, Kenneth Corts, Joseph McElroy 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.
Superior customer experience
– The customer experience strategy of Drilling Offshore in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Drilling Offshore 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 The Offshore Drilling Industry in 2011 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Drilling Offshore is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Drilling Offshore 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.
Learning organization
- Drilling Offshore 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 Drilling Offshore is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Offshore Drilling Industry in 2011 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Drilling Offshore has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Offshore Drilling Industry in 2011 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.
Low bargaining power of suppliers
– Suppliers of Drilling Offshore in the sector have low bargaining power. The Offshore Drilling Industry in 2011 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Drilling Offshore to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Drilling Offshore has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Drilling Offshore 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 The Offshore Drilling Industry in 2011 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.
Ability to recruit top talent
– Drilling Offshore is one of the leading recruiters in the industry. Managers in the The Offshore Drilling Industry in 2011 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses The Offshore Drilling Industry in 2011 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Offshore Drilling Industry in 2011 are -
Products dominated business model
– Even though Drilling Offshore 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 - The Offshore Drilling Industry in 2011 should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Offshore Drilling Industry in 2011, is just above the industry average. Drilling Offshore 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 bargaining power of channel partners
– Because of the regulatory requirements, Ramon Casadesus-Masanell, Kenneth Corts, Joseph McElroy suggests that, Drilling Offshore 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.
Need for greater diversity
– Drilling Offshore 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.
Interest costs
– Compare to the competition, Drilling Offshore 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Offshore Drilling Industry in 2011, in the dynamic environment Drilling Offshore has struggled to respond to the nimble upstart competition. Drilling Offshore 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 The Offshore Drilling Industry in 2011 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 The Offshore Drilling Industry in 2011 can leverage the sales team experience to cultivate customer relationships as Drilling Offshore is planning to shift buying processes online.
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 Drilling Offshore supply chain. Even after few cautionary changes mentioned in the HBR case study - The Offshore Drilling Industry in 2011, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Drilling Offshore vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Drilling Offshore 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.
Capital Spending Reduction
– Even during the low interest decade, Drilling Offshore 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.
Lack of clear differentiation of Drilling Offshore products
– To increase the profitability and margins on the products, Drilling Offshore needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities The Offshore Drilling Industry in 2011 | 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 The Offshore Drilling Industry in 2011 are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Drilling Offshore 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 Drilling Offshore to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Drilling Offshore 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Drilling Offshore 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 Drilling Offshore has opened avenues for new revenue streams for the organization in the industry. This can help Drilling Offshore to build a more holistic ecosystem as suggested in the The Offshore Drilling Industry in 2011 case study. Drilling Offshore can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Drilling Offshore can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Drilling Offshore in the consumer business. Now Drilling Offshore can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Drilling Offshore 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.
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 Drilling Offshore 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.
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. Drilling Offshore 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. Drilling Offshore 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Drilling Offshore 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.
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. Drilling Offshore can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Drilling Offshore is facing challenges because of the dominance of functional experts in the organization. The Offshore Drilling Industry in 2011 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.
Learning at scale
– Online learning technologies has now opened space for Drilling Offshore 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.
Threats The Offshore Drilling Industry in 2011 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Offshore Drilling Industry in 2011 are -
Stagnating economy with rate increase
– Drilling Offshore 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.
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 Drilling Offshore business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Drilling Offshore.
High dependence on third party suppliers
– Drilling Offshore 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.
Technology acceleration in Forth Industrial Revolution
– Drilling Offshore has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Drilling Offshore 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.
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. Drilling Offshore 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.
Increasing wage structure of Drilling Offshore
– 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 Drilling Offshore.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Drilling Offshore in the Strategy & Execution industry. The Strategy & Execution 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Drilling Offshore with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Drilling Offshore 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.
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. Drilling Offshore needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Offshore Drilling Industry in 2011, Drilling Offshore 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 .
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 The Offshore Drilling Industry in 2011 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 The Offshore Drilling Industry in 2011 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 The Offshore Drilling Industry in 2011 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 The Offshore Drilling Industry in 2011 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 The Offshore Drilling Industry in 2011 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 Drilling Offshore needs to make to build a sustainable competitive advantage.