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 - – digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies,
increasing transportation and logistics costs, increasing commodity prices, 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 -
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.
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.
Innovation driven organization
– Parmalat's Parmalat is one of the most innovative firm in sector. Manager in Parmalat SpA: An Impressive Milking System Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
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.
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.
Training and development
– Parmalat's Parmalat has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Parmalat SpA: An Impressive Milking System 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.
Analytics focus
– Parmalat's Parmalat 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 Stewart Hamilton, Ivan Moss 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.
High switching costs
– The high switching costs that Parmalat's Parmalat 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.
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.
Superior customer experience
– The customer experience strategy of Parmalat's Parmalat in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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 -
Lack of clear differentiation of Parmalat's Parmalat products
– To increase the profitability and margins on the products, Parmalat's Parmalat needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Parmalat SpA: An Impressive Milking System, is just above the industry average. Parmalat's Parmalat 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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Parmalat SpA: An Impressive Milking System, in the dynamic environment Parmalat's Parmalat has struggled to respond to the nimble upstart competition. Parmalat's Parmalat has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Parmalat SpA: An Impressive Milking System 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 Parmalat's Parmalat has relatively successful track record of launching new products.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Parmalat SpA: An Impressive Milking System, it seems that the employees of Parmalat's Parmalat 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 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.
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.
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 -
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.
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.
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.
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 Parmalat's Parmalat 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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Parmalat's Parmalat 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.
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.
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.
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.
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.
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 Parmalat's Parmalat in the consumer business. Now Parmalat's Parmalat can target international markets with far fewer capital restrictions requirements than the existing system.
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 -
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Parmalat's Parmalat with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 .
Stagnating economy with rate increase
– Parmalat's Parmalat 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.
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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Parmalat's Parmalat 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.
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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Parmalat's Parmalat can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.