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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, increasing energy prices, challanges to central banks by blockchain based private currencies, there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic ,
technology disruption, competitive advantages are harder to sustain because of technology dispersion, 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 -
Analytics focus
– Enron Sellside 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 David F. Hawkins, Jacob Cohen 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.
Operational resilience
– The operational resilience strategy in the Enron Corp.: May 6, 2001 Sell Recommendation 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 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.
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.
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.
Diverse revenue streams
– Enron Sellside is present in almost all the verticals within the industry. This has provided firm in Enron Corp.: May 6, 2001 Sell Recommendation 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.
Effective Research and Development (R&D)
– Enron Sellside 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 Enron Corp.: May 6, 2001 Sell Recommendation - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
Innovation driven organization
– Enron Sellside is one of the most innovative firm in sector. Manager in Enron Corp.: May 6, 2001 Sell Recommendation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Sustainable margins compare to other players in Finance & Accounting industry
– Enron Corp.: May 6, 2001 Sell Recommendation firm has clearly differentiated products in the market place. This has enabled Enron Sellside to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Enron Sellside to invest into research and development (R&D) and innovation.
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 -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Enron Corp.: May 6, 2001 Sell Recommendation HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Enron Sellside has relatively successful track record of launching new products.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Enron Corp.: May 6, 2001 Sell Recommendation, it seems that the employees of Enron Sellside 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.
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.
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.
Need for greater diversity
– Enron Sellside has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High cash cycle compare to competitors
Enron Sellside 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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Enron Corp.: May 6, 2001 Sell Recommendation, is just above the industry average. Enron Sellside 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.
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.
Skills based hiring
– The stress on hiring functional specialists at Enron Sellside 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 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 -
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.
Using analytics as competitive advantage
– Enron Sellside has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Enron Corp.: May 6, 2001 Sell Recommendation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Enron Sellside to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Learning at scale
– Online learning technologies has now opened space for Enron Sellside 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.
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.
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. Enron Sellside can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
Building a culture of innovation
– managers at Enron Sellside 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.
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.
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.
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.
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. Enron Sellside can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 -
Shortening product life cycle
– it is one of the major threat that Enron Sellside is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.
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.
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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Enron Sellside 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. Enron Sellside needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
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.
Consumer confidence and its impact on Enron Sellside 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Enron Corp.: May 6, 2001 Sell Recommendation, Enron Sellside 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 .
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.