Parmalat SpA: An Impressive Milking System SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Parmalat SpA: An Impressive Milking System
In December 2003, Parmalat SpA collapsed into unexpected bankruptcy. Its off-balance sheet debts were later revealed to total 14.3 billion euros, and it was discovered that it had allegedly been falsifying its accounts and profits for a period of over 10 years. Details the history of the company and Calisto Tanzi, the entrepreneur who founded it. Also describes the development to date of Parmalat's "Extraordinary Administration," the restructuring of the company under the Italian equivalent of Chapter 11 insolvency. Looks at how Parmalat disguised its financial problems for so long. Also explores: (1) when and why Parmalat's financial problems started; (2) how much Parmalat's strategy contributed to its problems; (3) the impact of changing external environments (political and economic) on Parmalat's problems; (4) the effect of Parmalat's history and origins as a family company on the way it managed its problems; (5) how such large accounting mis-statements could be perpetrated; (6) how those mis-statements could go undetected by investors, bankers, and regulators; and (7) what red flags and warning signals could have alerted outsiders to Parmalat's problems.
Swot Analysis of "Parmalat SpA: An Impressive Milking System" written by Stewart Hamilton, Ivan Moss includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Parmalat's Parmalat facing as an external strategic factors. Some of the topics covered in Parmalat SpA: An Impressive Milking System case study are - Strategic Management Strategies, Ethics, Reorganization and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Parmalat SpA: An Impressive Milking System casestudy better are - – talent flight as more people leaving formal jobs, increasing transportation and logistics costs, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, technology disruption, there is backlash against globalization,
increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Parmalat SpA: An Impressive Milking System
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Parmalat SpA: An Impressive Milking System case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Parmalat's Parmalat, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Parmalat's Parmalat 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 Parmalat SpA: An Impressive Milking System can be done for the following purposes –
1. Strategic planning using facts provided in Parmalat SpA: An Impressive Milking System case study
2. Improving business portfolio management of Parmalat's Parmalat
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 Parmalat's Parmalat
Strengths Parmalat SpA: An Impressive Milking System | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Parmalat's Parmalat in Parmalat SpA: An Impressive Milking System Harvard Business Review case study are -
Diverse revenue streams
– Parmalat's Parmalat is present in almost all the verticals within the industry. This has provided firm in Parmalat SpA: An Impressive Milking System 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Parmalat SpA: An Impressive Milking System firm has clearly differentiated products in the market place. This has enabled Parmalat's Parmalat to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Parmalat's Parmalat to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Parmalat's Parmalat digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Parmalat's Parmalat 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.
Learning organization
- Parmalat's Parmalat 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 Parmalat's Parmalat is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Parmalat SpA: An Impressive Milking System Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Parmalat's Parmalat 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 Parmalat SpA: An Impressive Milking System - 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
– Parmalat's Parmalat has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Parmalat's Parmalat to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Parmalat's Parmalat 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 Parmalat SpA: An Impressive Milking System HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Parmalat's Parmalat is one of the leading recruiters in the industry. Managers in the Parmalat SpA: An Impressive Milking System are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Parmalat's Parmalat is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Parmalat's Parmalat in the sector have low bargaining power. Parmalat SpA: An Impressive Milking System has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Parmalat's Parmalat to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Parmalat's Parmalat 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 lead change in Strategy & Execution field
– Parmalat's Parmalat is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Parmalat's Parmalat in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Parmalat SpA: An Impressive Milking System | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Parmalat SpA: An Impressive Milking System are -
Interest costs
– Compare to the competition, Parmalat's Parmalat 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.
Capital Spending Reduction
– Even during the low interest decade, Parmalat's Parmalat 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Stewart Hamilton, Ivan Moss suggests that, Parmalat's Parmalat 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Parmalat's Parmalat is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Parmalat SpA: An Impressive Milking System can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Parmalat SpA: An Impressive Milking System 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 Parmalat SpA: An Impressive Milking System can leverage the sales team experience to cultivate customer relationships as Parmalat's Parmalat is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Parmalat's Parmalat 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.
Increasing silos among functional specialists
– The organizational structure of Parmalat's Parmalat is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Parmalat's Parmalat needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Parmalat's Parmalat to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Parmalat's Parmalat, firm in the HBR case study Parmalat SpA: An Impressive Milking System needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Parmalat's Parmalat 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. Parmalat's Parmalat 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 cash cycle compare to competitors
Parmalat's Parmalat 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.
Slow to strategic competitive environment developments
– As Parmalat SpA: An Impressive Milking System HBR case study mentions - Parmalat's Parmalat 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.
Opportunities Parmalat SpA: An Impressive Milking System | 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 Parmalat SpA: An Impressive Milking System are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Parmalat's Parmalat is facing challenges because of the dominance of functional experts in the organization. Parmalat SpA: An Impressive Milking System 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Parmalat's Parmalat can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Parmalat's Parmalat to increase its market reach. Parmalat's Parmalat 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Parmalat's Parmalat 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 Parmalat's Parmalat to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Parmalat's Parmalat can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Parmalat SpA: An Impressive Milking System 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Parmalat's Parmalat can use these opportunities to build new business models that can help the communities that Parmalat's Parmalat operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Loyalty marketing
– Parmalat's Parmalat 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Parmalat's Parmalat 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, Parmalat SpA: An Impressive Milking System, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Parmalat's Parmalat 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. Parmalat's Parmalat 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.
Developing new processes and practices
– Parmalat's Parmalat 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.
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. Parmalat's Parmalat can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Parmalat's Parmalat 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Parmalat's Parmalat 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 Parmalat SpA: An Impressive Milking System External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Parmalat SpA: An Impressive Milking System are -
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 Parmalat's Parmalat.
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 Parmalat's Parmalat in the Strategy & Execution sector and impact the bottomline of the organization.
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. Parmalat's Parmalat 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.
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.
Shortening product life cycle
– it is one of the major threat that Parmalat's Parmalat is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Parmalat's Parmalat business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Parmalat's Parmalat 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.
Increasing wage structure of Parmalat's Parmalat
– 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 Parmalat's Parmalat.
Environmental challenges
– Parmalat's Parmalat 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. Parmalat's Parmalat can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Technology acceleration in Forth Industrial Revolution
– Parmalat's Parmalat has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Parmalat's Parmalat 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Parmalat SpA: An Impressive Milking System, Parmalat's Parmalat 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 .
Consumer confidence and its impact on Parmalat's Parmalat 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.
High dependence on third party suppliers
– Parmalat's Parmalat 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.
Weighted SWOT Analysis of Parmalat SpA: An Impressive Milking System 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 Parmalat SpA: An Impressive Milking System 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 Parmalat SpA: An Impressive Milking System 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 Parmalat SpA: An Impressive Milking System 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 Parmalat SpA: An Impressive Milking System 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 Parmalat's Parmalat needs to make to build a sustainable competitive advantage.