Case Study Description of Enron Corp.: May 6, 2001 Sell Recommendation
A consulting firm to institutional investors recommends selling Enron Corp.'s equity short on May 6, 2001, while many sellside analysts are recommending the stock as a "buy."
Swot Analysis of "Enron Corp.: May 6, 2001 Sell Recommendation" written by David F. Hawkins, Jacob Cohen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Enron Sellside facing as an external strategic factors. Some of the topics covered in Enron Corp.: May 6, 2001 Sell Recommendation case study are - Strategic Management Strategies, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Enron Corp.: May 6, 2001 Sell Recommendation casestudy better are - – increasing energy prices, increasing household debt because of falling income levels, there is backlash against globalization, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy,
supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Enron Corp.: May 6, 2001 Sell Recommendation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Enron Corp.: May 6, 2001 Sell Recommendation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Enron Sellside, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Enron Sellside 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 Enron Corp.: May 6, 2001 Sell Recommendation can be done for the following purposes –
1. Strategic planning using facts provided in Enron Corp.: May 6, 2001 Sell Recommendation case study
2. Improving business portfolio management of Enron Sellside
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 Enron Sellside
Strengths Enron Corp.: May 6, 2001 Sell Recommendation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Enron Sellside in Enron Corp.: May 6, 2001 Sell Recommendation Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Enron Sellside 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.
Ability to recruit top talent
– Enron Sellside is one of the leading recruiters in the industry. Managers in the Enron Corp.: May 6, 2001 Sell Recommendation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Enron Sellside 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Enron Sellside digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Enron Sellside 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.
Strong track record of project management
– Enron Sellside is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Enron Sellside
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Enron Sellside does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Enron Sellside has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Enron Sellside to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Enron Sellside 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 Enron Corp.: May 6, 2001 Sell Recommendation 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
– Enron Sellside has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Enron Sellside 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.
Learning organization
- Enron Sellside 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 Enron Sellside is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Enron Corp.: May 6, 2001 Sell Recommendation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Enron Sellside has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Enron Corp.: May 6, 2001 Sell Recommendation 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 Enron Sellside in the sector have low bargaining power. Enron Corp.: May 6, 2001 Sell Recommendation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Enron Sellside to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Enron Corp.: May 6, 2001 Sell Recommendation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Enron Corp.: May 6, 2001 Sell Recommendation are -
Low market penetration in new markets
– Outside its home market of Enron Sellside, firm in the HBR case study Enron Corp.: May 6, 2001 Sell Recommendation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Enron Sellside 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 Enron Sellside products
– To increase the profitability and margins on the products, Enron Sellside needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Enron Sellside 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. Enron Sellside 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.
High bargaining power of channel partners
– Because of the regulatory requirements, David F. Hawkins, Jacob Cohen suggests that, Enron Sellside 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.
Slow to strategic competitive environment developments
– As Enron Corp.: May 6, 2001 Sell Recommendation HBR case study mentions - Enron Sellside 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.
Increasing silos among functional specialists
– The organizational structure of Enron Sellside is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Enron Sellside needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Enron Sellside to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Enron Corp.: May 6, 2001 Sell Recommendation 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 Enron Sellside 's lucrative customers.
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 Enron Sellside supply chain. Even after few cautionary changes mentioned in the HBR case study - Enron Corp.: May 6, 2001 Sell Recommendation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Enron Sellside vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Enron Corp.: May 6, 2001 Sell Recommendation 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 Enron Corp.: May 6, 2001 Sell Recommendation can leverage the sales team experience to cultivate customer relationships as Enron Sellside is planning to shift buying processes online.
Interest costs
– Compare to the competition, Enron Sellside 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.
Opportunities Enron Corp.: May 6, 2001 Sell Recommendation | 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 Enron Corp.: May 6, 2001 Sell Recommendation are -
Buying journey improvements
– Enron Sellside can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Enron Corp.: May 6, 2001 Sell Recommendation 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Enron Sellside can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Enron Sellside 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.
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 Enron Sellside in the consumer business. Now Enron Sellside 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 Enron Sellside 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Enron Sellside 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.
Leveraging digital technologies
– Enron Sellside 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.
Developing new processes and practices
– Enron Sellside 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Enron Sellside is facing challenges because of the dominance of functional experts in the organization. Enron Corp.: May 6, 2001 Sell Recommendation case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Enron Sellside can use these opportunities to build new business models that can help the communities that Enron Sellside operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Creating value in data economy
– The success of analytics program of Enron Sellside has opened avenues for new revenue streams for the organization in the industry. This can help Enron Sellside to build a more holistic ecosystem as suggested in the Enron Corp.: May 6, 2001 Sell Recommendation case study. Enron Sellside can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Enron Sellside to increase its market reach. Enron Sellside 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Enron Sellside 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, Enron Corp.: May 6, 2001 Sell Recommendation, 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 Enron Corp.: May 6, 2001 Sell Recommendation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Enron Corp.: May 6, 2001 Sell Recommendation are -
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. Enron Sellside 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 Enron Sellside in the Finance & Accounting 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.
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
– Enron Sellside 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
– Enron Sellside has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Enron Sellside 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Enron Sellside 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 Enron Corp.: May 6, 2001 Sell Recommendation .
Stagnating economy with rate increase
– Enron Sellside 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Enron Sellside with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Enron Sellside
– 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 Enron Sellside.
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. Enron Sellside 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.
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 Enron Sellside business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Enron Sellside 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. Enron Sellside can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of Enron Corp.: May 6, 2001 Sell Recommendation 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 Enron Corp.: May 6, 2001 Sell Recommendation 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 Enron Corp.: May 6, 2001 Sell Recommendation 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 Enron Corp.: May 6, 2001 Sell Recommendation 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 Enron Corp.: May 6, 2001 Sell Recommendation 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 Enron Sellside needs to make to build a sustainable competitive advantage.