Arcor: Global Strategy and Local Turbulence (Abridged) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Arcor: Global Strategy and Local Turbulence (Abridged)
Argentine confectionery manufacturer, Arcor Group, seeks to implement an international strategy but in 2003, while recovering from the Argentine financial crisis, globalization plans are thwarted. Already Latin America's leading candy producer and an exporter to over 100 countries, Arcor analyzes how it can become truly global with production facilities and distribution networks in various regions, such as North America, Europe, and Asia. First, however, Arcor must stabilize its operations at home, where a devalued peso, economic uncertainty, and political instability still linger from the devastating financial crisis.
Authors :: Pankaj Ghemawat, Michael G. Rukstad, Jennifer L. Illes
Swot Analysis of "Arcor: Global Strategy and Local Turbulence (Abridged)" written by Pankaj Ghemawat, Michael G. Rukstad, Jennifer L. Illes includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Arcor Argentine facing as an external strategic factors. Some of the topics covered in Arcor: Global Strategy and Local Turbulence (Abridged) case study are - Strategic Management Strategies, Globalization, Operations management, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Arcor: Global Strategy and Local Turbulence (Abridged) casestudy better are - – increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels,
central banks are concerned over increasing inflation, wage bills are increasing, etc
Introduction to SWOT Analysis of Arcor: Global Strategy and Local Turbulence (Abridged)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Arcor: Global Strategy and Local Turbulence (Abridged) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Arcor Argentine, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Arcor Argentine 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 Arcor: Global Strategy and Local Turbulence (Abridged) can be done for the following purposes –
1. Strategic planning using facts provided in Arcor: Global Strategy and Local Turbulence (Abridged) case study
2. Improving business portfolio management of Arcor Argentine
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 Arcor Argentine
Strengths Arcor: Global Strategy and Local Turbulence (Abridged) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Arcor Argentine in Arcor: Global Strategy and Local Turbulence (Abridged) Harvard Business Review case study are -
Ability to recruit top talent
– Arcor Argentine is one of the leading recruiters in the industry. Managers in the Arcor: Global Strategy and Local Turbulence (Abridged) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Arcor Argentine in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Arcor Argentine
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Arcor Argentine does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Arcor Argentine 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 Arcor: Global Strategy and Local Turbulence (Abridged) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Arcor Argentine in the sector have low bargaining power. Arcor: Global Strategy and Local Turbulence (Abridged) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Arcor Argentine to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Arcor Argentine is present in almost all the verticals within the industry. This has provided firm in Arcor: Global Strategy and Local Turbulence (Abridged) 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.
Learning organization
- Arcor Argentine 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 Arcor Argentine is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Arcor: Global Strategy and Local Turbulence (Abridged) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Strategy & Execution industry
– Arcor: Global Strategy and Local Turbulence (Abridged) firm has clearly differentiated products in the market place. This has enabled Arcor Argentine to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Arcor Argentine to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Arcor Argentine 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.
Strong track record of project management
– Arcor Argentine is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Arcor Argentine 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 Pankaj Ghemawat, Michael G. Rukstad, Jennifer L. Illes 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.
Innovation driven organization
– Arcor Argentine is one of the most innovative firm in sector. Manager in Arcor: Global Strategy and Local Turbulence (Abridged) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Arcor: Global Strategy and Local Turbulence (Abridged) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Arcor: Global Strategy and Local Turbulence (Abridged) are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Arcor: Global Strategy and Local Turbulence (Abridged), in the dynamic environment Arcor Argentine has struggled to respond to the nimble upstart competition. Arcor Argentine has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor: Global Strategy and Local Turbulence (Abridged) can leverage the sales team experience to cultivate customer relationships as Arcor Argentine is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Arcor Argentine is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Arcor Argentine needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Arcor Argentine to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Arcor Argentine is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Arcor: Global Strategy and Local Turbulence (Abridged) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Arcor Argentine 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, Pankaj Ghemawat, Michael G. Rukstad, Jennifer L. Illes suggests that, Arcor Argentine 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Arcor: Global Strategy and Local Turbulence (Abridged), it seems that the employees of Arcor Argentine 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.
Lack of clear differentiation of Arcor Argentine products
– To increase the profitability and margins on the products, Arcor Argentine needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Arcor Argentine 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.
Low market penetration in new markets
– Outside its home market of Arcor Argentine, firm in the HBR case study Arcor: Global Strategy and Local Turbulence (Abridged) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Arcor Argentine has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Arcor: Global Strategy and Local Turbulence (Abridged) should strive to include more intangible value offerings along with its core products and services.
Opportunities Arcor: Global Strategy and Local Turbulence (Abridged) | 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 Arcor: Global Strategy and Local Turbulence (Abridged) are -
Manufacturing automation
– Arcor Argentine can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Learning at scale
– Online learning technologies has now opened space for Arcor Argentine 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Arcor Argentine 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 Arcor Argentine to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Arcor Argentine to increase its market reach. Arcor Argentine 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.
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. Arcor Argentine can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Arcor Argentine 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.
Leveraging digital technologies
– Arcor Argentine 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 Arcor Argentine 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.
Loyalty marketing
– Arcor Argentine 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.
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. Arcor Argentine can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Arcor Argentine has opened avenues for new revenue streams for the organization in the industry. This can help Arcor Argentine to build a more holistic ecosystem as suggested in the Arcor: Global Strategy and Local Turbulence (Abridged) case study. Arcor Argentine can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Arcor Argentine can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Arcor: Global Strategy and Local Turbulence (Abridged) 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.
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 Arcor Argentine in the consumer business. Now Arcor Argentine can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Arcor: Global Strategy and Local Turbulence (Abridged) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Arcor: Global Strategy and Local Turbulence (Abridged) 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. Arcor Argentine 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.
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.
Consumer confidence and its impact on Arcor Argentine 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 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. Arcor Argentine needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Regulatory challenges
– Arcor Argentine 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Arcor Argentine 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.
Environmental challenges
– Arcor Argentine 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. Arcor Argentine can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Arcor Argentine 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 Arcor: Global Strategy and Local Turbulence (Abridged) .
Shortening product life cycle
– it is one of the major threat that Arcor Argentine is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Arcor: Global Strategy and Local Turbulence (Abridged), Arcor Argentine 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Arcor Argentine with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Arcor Argentine 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.
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 Arcor Argentine business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor Argentine needs to make to build a sustainable competitive advantage.
