Restructuring CNPC and the Proposed Listing of PetroChina SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Restructuring CNPC and the Proposed Listing of PetroChina
China National Petroleum Corporation (CNPC) is one of the largest state-owned enterprises in China and needs to separate the exploration, refining, and marketing resources from the oil field services and supply resources, as well as the company's resources devoted to social services. Describes the issues surrounding the initial public offering (IPO) of PetroChina, a subsidiary of CNPC, including the international, national, and competitive context in which CNPC found itself prior to the IPO, and the strategy needed to ensure that the subsidiary will be viable in an increasingly competitive international oil industry.
Swot Analysis of "Restructuring CNPC and the Proposed Listing of PetroChina" written by W. Glenn Rowe includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cnpc Petrochina facing as an external strategic factors. Some of the topics covered in Restructuring CNPC and the Proposed Listing of PetroChina case study are - Strategic Management Strategies, Competitive strategy, International business, IPO, Reorganization and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Restructuring CNPC and the Proposed Listing of PetroChina casestudy better are - – digital marketing is dominated by two big players Facebook and Google, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing transportation and logistics costs, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Restructuring CNPC and the Proposed Listing of PetroChina
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Restructuring CNPC and the Proposed Listing of PetroChina case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cnpc Petrochina, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cnpc Petrochina 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 Restructuring CNPC and the Proposed Listing of PetroChina can be done for the following purposes –
1. Strategic planning using facts provided in Restructuring CNPC and the Proposed Listing of PetroChina case study
2. Improving business portfolio management of Cnpc Petrochina
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 Cnpc Petrochina
Strengths Restructuring CNPC and the Proposed Listing of PetroChina | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cnpc Petrochina in Restructuring CNPC and the Proposed Listing of PetroChina Harvard Business Review case study are -
High brand equity
– Cnpc Petrochina has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cnpc Petrochina to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Cnpc Petrochina 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.
Innovation driven organization
– Cnpc Petrochina is one of the most innovative firm in sector. Manager in Restructuring CNPC and the Proposed Listing of PetroChina 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 Cnpc Petrochina 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Restructuring CNPC and the Proposed Listing of PetroChina firm has clearly differentiated products in the market place. This has enabled Cnpc Petrochina to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Cnpc Petrochina to invest into research and development (R&D) and innovation.
Organizational Resilience of Cnpc Petrochina
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cnpc Petrochina does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Cnpc Petrochina in the sector have low bargaining power. Restructuring CNPC and the Proposed Listing of PetroChina has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cnpc Petrochina to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Cnpc Petrochina 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 W. Glenn Rowe 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.
Highly skilled collaborators
– Cnpc Petrochina 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 Restructuring CNPC and the Proposed Listing of PetroChina HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Cnpc Petrochina has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cnpc Petrochina 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.
Effective Research and Development (R&D)
– Cnpc Petrochina 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 Restructuring CNPC and the Proposed Listing of PetroChina - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Cnpc Petrochina is one of the leading recruiters in the industry. Managers in the Restructuring CNPC and the Proposed Listing of PetroChina 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 Restructuring CNPC and the Proposed Listing of PetroChina | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Restructuring CNPC and the Proposed Listing of PetroChina are -
Interest costs
– Compare to the competition, Cnpc Petrochina 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
– Cnpc Petrochina 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.
No frontier risks strategy
– After analyzing the HBR case study Restructuring CNPC and the Proposed Listing of PetroChina, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow decision making process
– As mentioned earlier in the report, Cnpc Petrochina has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Cnpc Petrochina even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Capital Spending Reduction
– Even during the low interest decade, Cnpc Petrochina 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Restructuring CNPC and the Proposed Listing of PetroChina, it seems that the employees of Cnpc Petrochina 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cnpc Petrochina is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Restructuring CNPC and the Proposed Listing of PetroChina can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Cnpc Petrochina 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 - Restructuring CNPC and the Proposed Listing of PetroChina should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, W. Glenn Rowe suggests that, Cnpc Petrochina 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.
Increasing silos among functional specialists
– The organizational structure of Cnpc Petrochina is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cnpc Petrochina needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cnpc Petrochina to focus more on services rather than just following the product oriented approach.
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 Cnpc Petrochina supply chain. Even after few cautionary changes mentioned in the HBR case study - Restructuring CNPC and the Proposed Listing of PetroChina, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cnpc Petrochina vulnerable to further global disruptions in South East Asia.
Opportunities Restructuring CNPC and the Proposed Listing of PetroChina | 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 Restructuring CNPC and the Proposed Listing of PetroChina are -
Building a culture of innovation
– managers at Cnpc Petrochina 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.
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. Cnpc Petrochina 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. Cnpc Petrochina 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.
Better consumer reach
– The expansion of the 5G network will help Cnpc Petrochina to increase its market reach. Cnpc Petrochina 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.
Loyalty marketing
– Cnpc Petrochina has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cnpc Petrochina 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 Cnpc Petrochina to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cnpc Petrochina 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.
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. Cnpc Petrochina can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Cnpc Petrochina has opened avenues for new revenue streams for the organization in the industry. This can help Cnpc Petrochina to build a more holistic ecosystem as suggested in the Restructuring CNPC and the Proposed Listing of PetroChina case study. Cnpc Petrochina can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Cnpc Petrochina can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Buying journey improvements
– Cnpc Petrochina can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Restructuring CNPC and the Proposed Listing of PetroChina 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.
Leveraging digital technologies
– Cnpc Petrochina 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 Cnpc Petrochina 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cnpc Petrochina 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.
Threats Restructuring CNPC and the Proposed Listing of PetroChina External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Restructuring CNPC and the Proposed Listing of PetroChina are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Restructuring CNPC and the Proposed Listing of PetroChina, Cnpc Petrochina 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cnpc Petrochina 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.
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 Cnpc Petrochina in the Strategy & Execution sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Cnpc Petrochina 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.
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 Cnpc Petrochina business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Cnpc Petrochina 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. Cnpc Petrochina can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing wage structure of Cnpc Petrochina
– 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 Cnpc Petrochina.
Consumer confidence and its impact on Cnpc Petrochina 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.
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.
High dependence on third party suppliers
– Cnpc Petrochina high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Cnpc Petrochina needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Cnpc Petrochina has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cnpc Petrochina 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 Restructuring CNPC and the Proposed Listing of PetroChina 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 Restructuring CNPC and the Proposed Listing of PetroChina 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 Restructuring CNPC and the Proposed Listing of PetroChina 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 Restructuring CNPC and the Proposed Listing of PetroChina 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 Restructuring CNPC and the Proposed Listing of PetroChina 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 Cnpc Petrochina needs to make to build a sustainable competitive advantage.
