Acquisition Wave in the Fine Chemicals Industry (C) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Acquisition Wave in the Fine Chemicals Industry (C)
Most cases on M&As focus on the value of an individual deal (synergies, price, integration issues). In the case series "Acquisition Wave in the Fine Chemicals Industry", we take another perspective. We aim to describe how managers' decisions to make an acquisition and to determine the acquisition price are likely to be influenced by the merger activity in their industry and their competitors' actions. Driven by shareholder pressure to focus their portfolios, leading specialty and fine chemicals players such as Degussa, Clariant and Rhodia entered into major fine chemicals acquisition in 2000 and overpaid. Subsequently, this led to decreasing stock prices and financial turmoil. The fact that the other firms overpaid, despite publicly available signals from stock markets indicating the overpayment, and the nature of the chemicals industry and management, are clear indicators for irrational herd behavior.
Swot Analysis of "Acquisition Wave in the Fine Chemicals Industry (C)" written by Laurence Capron, Andrew Horncastle includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Chemicals Fine facing as an external strategic factors. Some of the topics covered in Acquisition Wave in the Fine Chemicals Industry (C) case study are - Strategic Management Strategies, Mergers & acquisitions and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Acquisition Wave in the Fine Chemicals Industry (C) casestudy better are - – increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, increasing energy prices, increasing commodity prices, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google,
increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Acquisition Wave in the Fine Chemicals Industry (C)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Acquisition Wave in the Fine Chemicals Industry (C) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Chemicals Fine, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Chemicals Fine 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 Acquisition Wave in the Fine Chemicals Industry (C) can be done for the following purposes –
1. Strategic planning using facts provided in Acquisition Wave in the Fine Chemicals Industry (C) case study
2. Improving business portfolio management of Chemicals Fine
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 Chemicals Fine
Strengths Acquisition Wave in the Fine Chemicals Industry (C) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Chemicals Fine in Acquisition Wave in the Fine Chemicals Industry (C) Harvard Business Review case study are -
Organizational Resilience of Chemicals Fine
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Chemicals Fine does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Chemicals Fine is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Chemicals Fine 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 Acquisition Wave in the Fine Chemicals Industry (C) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Chemicals Fine 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.
High brand equity
– Chemicals Fine has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Chemicals Fine to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Chemicals Fine digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Chemicals Fine 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 lead change in Strategy & Execution field
– Chemicals Fine 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 Chemicals Fine in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Strategy & Execution industry
– Acquisition Wave in the Fine Chemicals Industry (C) firm has clearly differentiated products in the market place. This has enabled Chemicals Fine to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Chemicals Fine to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Chemicals Fine in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Chemicals Fine is present in almost all the verticals within the industry. This has provided firm in Acquisition Wave in the Fine Chemicals Industry (C) 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.
Ability to recruit top talent
– Chemicals Fine is one of the leading recruiters in the industry. Managers in the Acquisition Wave in the Fine Chemicals Industry (C) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Acquisition Wave in the Fine Chemicals Industry (C) 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.
Weaknesses Acquisition Wave in the Fine Chemicals Industry (C) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Acquisition Wave in the Fine Chemicals Industry (C) are -
No frontier risks strategy
– After analyzing the HBR case study Acquisition Wave in the Fine Chemicals Industry (C), it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow to strategic competitive environment developments
– As Acquisition Wave in the Fine Chemicals Industry (C) HBR case study mentions - Chemicals Fine 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.
High cash cycle compare to competitors
Chemicals Fine 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 decision making process
– As mentioned earlier in the report, Chemicals Fine 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. Chemicals Fine 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Acquisition Wave in the Fine Chemicals Industry (C) 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 Chemicals Fine has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Laurence Capron, Andrew Horncastle suggests that, Chemicals Fine 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Acquisition Wave in the Fine Chemicals Industry (C), in the dynamic environment Chemicals Fine has struggled to respond to the nimble upstart competition. Chemicals Fine has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Acquisition Wave in the Fine Chemicals Industry (C) 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 Chemicals Fine 's lucrative customers.
Interest costs
– Compare to the competition, Chemicals Fine 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 Chemicals Fine supply chain. Even after few cautionary changes mentioned in the HBR case study - Acquisition Wave in the Fine Chemicals Industry (C), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Chemicals Fine vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Acquisition Wave in the Fine Chemicals Industry (C), it seems that the employees of Chemicals Fine 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.
Opportunities Acquisition Wave in the Fine Chemicals Industry (C) | 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 Acquisition Wave in the Fine Chemicals Industry (C) are -
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 Chemicals Fine to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Building a culture of innovation
– managers at Chemicals Fine can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
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. Chemicals Fine 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 Chemicals Fine has opened avenues for new revenue streams for the organization in the industry. This can help Chemicals Fine to build a more holistic ecosystem as suggested in the Acquisition Wave in the Fine Chemicals Industry (C) case study. Chemicals Fine can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Chemicals Fine 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.
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. Chemicals Fine can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Chemicals Fine 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. Chemicals Fine 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.
Buying journey improvements
– Chemicals Fine can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Acquisition Wave in the Fine Chemicals Industry (C) 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 Chemicals Fine in the consumer business. Now Chemicals Fine can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Chemicals Fine is facing challenges because of the dominance of functional experts in the organization. Acquisition Wave in the Fine Chemicals Industry (C) 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.
Leveraging digital technologies
– Chemicals Fine 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Chemicals Fine can use these opportunities to build new business models that can help the communities that Chemicals Fine operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Chemicals Fine 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.
Threats Acquisition Wave in the Fine Chemicals Industry (C) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Acquisition Wave in the Fine Chemicals Industry (C) are -
Consumer confidence and its impact on Chemicals Fine 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.
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 Chemicals Fine in the Strategy & Execution sector and impact the bottomline of the organization.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Chemicals Fine 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.
High dependence on third party suppliers
– Chemicals Fine 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.
Technology acceleration in Forth Industrial Revolution
– Chemicals Fine has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Chemicals Fine 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.
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 Chemicals Fine business can come under increasing regulations regarding data privacy, data security, 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 Acquisition Wave in the Fine Chemicals Industry (C), Chemicals Fine 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
– Chemicals Fine 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.
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. Chemicals Fine needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Chemicals Fine is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Chemicals Fine can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Chemicals Fine.
Weighted SWOT Analysis of Acquisition Wave in the Fine Chemicals Industry (C) 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 Acquisition Wave in the Fine Chemicals Industry (C) 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 Acquisition Wave in the Fine Chemicals Industry (C) 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 Acquisition Wave in the Fine Chemicals Industry (C) 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 Acquisition Wave in the Fine Chemicals Industry (C) 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 Chemicals Fine needs to make to build a sustainable competitive advantage.
