Privatization of Telecommunications in Peru (Sequel) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Privatization of Telecommunications in Peru (Sequel)
When the administration of Peru president Alberto Fujimori embarks on an ambitious privatization program, it turns inevitably to the nation's creaking telephone system. With but 2.5 phone lines per 100 persons, Peru, in the mid-1990s, had the lowest phone "density" in Latin America; installation of a new line took years, except via a thriving black market in existing lines. But the privatization committee which begins to plot the role of both the existing local and long distance phone monopolies, knows that it faces formidable obstacles to change: a suspicious and powerful military which nationalized the phone system in the 1970s; an influential cellular phone operator with his own agenda; existing unions, doubtful legislators who must approve a constitutional amendment to allow privatization to go forward. This case is about the political management of privatization. It describes the "interest group map" developed by the privatization committee and poses the question of what tactical approach should be taken with each. Case users must envision the potential conflicts, the objective desired, and the most useful tactics. The sequel describes the early success of the privatization process, after the phone system's sale to the Spanish phone giant, Telefonica. HKS Case Number 1404.1
Swot Analysis of "Privatization of Telecommunications in Peru (Sequel)" written by Merilee Grindle, Esther Scott includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Privatization Phone facing as an external strategic factors. Some of the topics covered in Privatization of Telecommunications in Peru (Sequel) case study are - Strategic Management Strategies, Economy, Entrepreneurship, IT, Operations management, Regulation, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Privatization of Telecommunications in Peru (Sequel) casestudy better are - – there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, wage bills are increasing, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , technology disruption,
central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Privatization of Telecommunications in Peru (Sequel)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Privatization of Telecommunications in Peru (Sequel) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Privatization Phone, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Privatization Phone 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 Privatization of Telecommunications in Peru (Sequel) can be done for the following purposes –
1. Strategic planning using facts provided in Privatization of Telecommunications in Peru (Sequel) case study
2. Improving business portfolio management of Privatization Phone
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 Privatization Phone
Strengths Privatization of Telecommunications in Peru (Sequel) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Privatization Phone in Privatization of Telecommunications in Peru (Sequel) Harvard Business Review case study are -
High switching costs
– The high switching costs that Privatization Phone 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.
Low bargaining power of suppliers
– Suppliers of Privatization Phone in the sector have low bargaining power. Privatization of Telecommunications in Peru (Sequel) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Privatization Phone to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Privatization Phone has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Privatization Phone to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Privatization Phone 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 Merilee Grindle, Esther Scott 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.
Learning organization
- Privatization Phone 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 Privatization Phone is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Privatization of Telecommunications in Peru (Sequel) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Privatization Phone 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 Privatization of Telecommunications in Peru (Sequel) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Privatization Phone 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 Privatization of Telecommunications in Peru (Sequel) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Privatization Phone has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Privatization Phone has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Operational resilience
– The operational resilience strategy in the Privatization of Telecommunications in Peru (Sequel) 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.
Innovation driven organization
– Privatization Phone is one of the most innovative firm in sector. Manager in Privatization of Telecommunications in Peru (Sequel) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Privatization Phone is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Privatization Phone is one of the leading recruiters in the industry. Managers in the Privatization of Telecommunications in Peru (Sequel) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Privatization of Telecommunications in Peru (Sequel) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Privatization of Telecommunications in Peru (Sequel) are -
Need for greater diversity
– Privatization Phone 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 operating costs
– Compare to the competitors, firm in the HBR case study Privatization of Telecommunications in Peru (Sequel) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Privatization Phone 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Privatization Phone is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Privatization of Telecommunications in Peru (Sequel) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Privatization Phone 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. Privatization Phone 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.
Increasing silos among functional specialists
– The organizational structure of Privatization Phone is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Privatization Phone needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Privatization Phone to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Privatization Phone 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Privatization of Telecommunications in Peru (Sequel), it seems that the employees of Privatization Phone 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Privatization of Telecommunications in Peru (Sequel), in the dynamic environment Privatization Phone has struggled to respond to the nimble upstart competition. Privatization Phone 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, Privatization Phone 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 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 Privatization Phone supply chain. Even after few cautionary changes mentioned in the HBR case study - Privatization of Telecommunications in Peru (Sequel), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Privatization Phone vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Privatization Phone 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.
Opportunities Privatization of Telecommunications in Peru (Sequel) | 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 Privatization of Telecommunications in Peru (Sequel) are -
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. Privatization Phone can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Privatization Phone in the consumer business. Now Privatization Phone can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Privatization Phone has opened avenues for new revenue streams for the organization in the industry. This can help Privatization Phone to build a more holistic ecosystem as suggested in the Privatization of Telecommunications in Peru (Sequel) case study. Privatization Phone can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Privatization Phone 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. Privatization Phone 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.
Manufacturing automation
– Privatization Phone 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.
Using analytics as competitive advantage
– Privatization Phone 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 Privatization of Telecommunications in Peru (Sequel) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Privatization Phone to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Privatization Phone 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Privatization Phone 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, Privatization of Telecommunications in Peru (Sequel), 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 Privatization Phone 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
– Privatization Phone 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 Privatization Phone 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 Privatization Phone 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 Privatization Phone to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Privatization Phone 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.
Threats Privatization of Telecommunications in Peru (Sequel) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Privatization of Telecommunications in Peru (Sequel) are -
Environmental challenges
– Privatization Phone 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. Privatization Phone can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Privatization Phone 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.
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 Privatization Phone in the Strategy & Execution sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Privatization Phone 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 Privatization of Telecommunications in Peru (Sequel) .
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. Privatization Phone needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing wage structure of Privatization Phone
– 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 Privatization Phone.
Regulatory challenges
– Privatization Phone 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.
Stagnating economy with rate increase
– Privatization Phone 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.
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. Privatization Phone 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.
High dependence on third party suppliers
– Privatization Phone 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.
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 Privatization Phone.
Technology acceleration in Forth Industrial Revolution
– Privatization Phone has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Privatization Phone 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 Privatization of Telecommunications in Peru (Sequel) 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 Privatization of Telecommunications in Peru (Sequel) 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 Privatization of Telecommunications in Peru (Sequel) 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 Privatization of Telecommunications in Peru (Sequel) 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 Privatization of Telecommunications in Peru (Sequel) 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 Privatization Phone needs to make to build a sustainable competitive advantage.
