Cap Gemini Ernst & Young: A Global Merger (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Cap Gemini Ernst & Young: A Global Merger (A)
French IT consulting giant Cap Gemini is poised to purchase the consulting arm of Ernst & Young, a U.S.-based Big 5 accounting firm. In doing so, many differences need to be resolved, including negotiating with Ernst & Young entities all over the world as well as converting Ernst & Young partners into employees of publicly held Cap Gemini. Amidst all of the decisions, the market for IT consulting services is changing rapidly, further complicating the merger negotiations and implementation. Teaching Purpose: To study the range of issues that must be considered and resolved in negotiating a professional services firm merger, the valuation and motivational challenges associated with merging a private entity into a public entity, and the challenges of negotiating a cross-border merger.
Authors :: Ashish Nanda, Lisa Rohrer, Bertrand Moingeon, Guillaume Soenen
Swot Analysis of "Cap Gemini Ernst & Young: A Global Merger (A)" written by Ashish Nanda, Lisa Rohrer, Bertrand Moingeon, Guillaume Soenen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ernst Gemini facing as an external strategic factors. Some of the topics covered in Cap Gemini Ernst & Young: A Global Merger (A) case study are - Strategic Management Strategies, IT, Mergers & acquisitions, Negotiations and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Cap Gemini Ernst & Young: A Global Merger (A) casestudy better are - – technology disruption, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels,
challanges to central banks by blockchain based private currencies, increasing commodity prices, etc
Introduction to SWOT Analysis of Cap Gemini Ernst & Young: A Global Merger (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cap Gemini Ernst & Young: A Global Merger (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ernst Gemini, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ernst Gemini 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 Cap Gemini Ernst & Young: A Global Merger (A) can be done for the following purposes –
1. Strategic planning using facts provided in Cap Gemini Ernst & Young: A Global Merger (A) case study
2. Improving business portfolio management of Ernst Gemini
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 Ernst Gemini
Strengths Cap Gemini Ernst & Young: A Global Merger (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ernst Gemini in Cap Gemini Ernst & Young: A Global Merger (A) Harvard Business Review case study are -
Innovation driven organization
– Ernst Gemini is one of the most innovative firm in sector. Manager in Cap Gemini Ernst & Young: A Global Merger (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Ernst Gemini 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 Cap Gemini Ernst & Young: A Global Merger (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Ernst Gemini 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.
Training and development
– Ernst Gemini has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Cap Gemini Ernst & Young: A Global Merger (A) 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.
Highly skilled collaborators
– Ernst Gemini 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 Cap Gemini Ernst & Young: A Global Merger (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– Cap Gemini Ernst & Young: A Global Merger (A) firm has clearly differentiated products in the market place. This has enabled Ernst Gemini to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Ernst Gemini to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Ernst Gemini in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Ernst Gemini is present in almost all the verticals within the industry. This has provided firm in Cap Gemini Ernst & Young: A Global Merger (A) 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.
Low bargaining power of suppliers
– Suppliers of Ernst Gemini in the sector have low bargaining power. Cap Gemini Ernst & Young: A Global Merger (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ernst Gemini to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Ernst Gemini are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Analytics focus
– Ernst Gemini 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 Ashish Nanda, Lisa Rohrer, Bertrand Moingeon, Guillaume Soenen 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.
Successful track record of launching new products
– Ernst Gemini has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ernst Gemini 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.
Weaknesses Cap Gemini Ernst & Young: A Global Merger (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cap Gemini Ernst & Young: A Global Merger (A) are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Cap Gemini Ernst & Young: A Global Merger (A), in the dynamic environment Ernst Gemini has struggled to respond to the nimble upstart competition. Ernst Gemini 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 Cap Gemini Ernst & Young: A Global Merger (A) 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 Cap Gemini Ernst & Young: A Global Merger (A) can leverage the sales team experience to cultivate customer relationships as Ernst Gemini is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Cap Gemini Ernst & Young: A Global Merger (A), 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Cap Gemini Ernst & Young: A Global Merger (A), is just above the industry average. Ernst Gemini 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.
Interest costs
– Compare to the competition, Ernst Gemini 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 cash cycle compare to competitors
Ernst Gemini 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Cap Gemini Ernst & Young: A Global Merger (A) 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 Ernst Gemini has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Ashish Nanda, Lisa Rohrer, Bertrand Moingeon, Guillaume Soenen suggests that, Ernst Gemini 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.
Lack of clear differentiation of Ernst Gemini products
– To increase the profitability and margins on the products, Ernst Gemini needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Ernst Gemini 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 - Cap Gemini Ernst & Young: A Global Merger (A) should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Cap Gemini Ernst & Young: A Global Merger (A) HBR case study mentions - Ernst Gemini takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Cap Gemini Ernst & Young: A Global Merger (A) | 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 Cap Gemini Ernst & Young: A Global Merger (A) are -
Manufacturing automation
– Ernst Gemini 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.
Building a culture of innovation
– managers at Ernst Gemini 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ernst Gemini 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, Cap Gemini Ernst & Young: A Global Merger (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Ernst Gemini 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 Cap Gemini Ernst & Young: A Global Merger (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ernst Gemini to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Ernst Gemini can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Cap Gemini Ernst & Young: A Global Merger (A) 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.
Creating value in data economy
– The success of analytics program of Ernst Gemini has opened avenues for new revenue streams for the organization in the industry. This can help Ernst Gemini to build a more holistic ecosystem as suggested in the Cap Gemini Ernst & Young: A Global Merger (A) case study. Ernst Gemini can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ernst Gemini 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 Ernst Gemini to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ernst Gemini is facing challenges because of the dominance of functional experts in the organization. Cap Gemini Ernst & Young: A Global Merger (A) 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.
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. Ernst Gemini can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Ernst Gemini 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.
Better consumer reach
– The expansion of the 5G network will help Ernst Gemini to increase its market reach. Ernst Gemini 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.
Leveraging digital technologies
– Ernst Gemini 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, Ernst Gemini can use these opportunities to build new business models that can help the communities that Ernst Gemini operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats Cap Gemini Ernst & Young: A Global Merger (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cap Gemini Ernst & Young: A Global Merger (A) are -
Stagnating economy with rate increase
– Ernst Gemini 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ernst Gemini with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Environmental challenges
– Ernst Gemini 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. Ernst Gemini can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Shortening product life cycle
– it is one of the major threat that Ernst Gemini is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Ernst Gemini 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.
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. Ernst Gemini can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Ernst Gemini business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ernst Gemini 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.
Consumer confidence and its impact on Ernst Gemini 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ernst Gemini 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 Cap Gemini Ernst & Young: A Global Merger (A) .
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.
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 Ernst Gemini in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Cap Gemini Ernst & Young: A Global Merger (A) 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 Cap Gemini Ernst & Young: A Global Merger (A) 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 Cap Gemini Ernst & Young: A Global Merger (A) 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 Cap Gemini Ernst & Young: A Global Merger (A) 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 Cap Gemini Ernst & Young: A Global Merger (A) 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 Ernst Gemini needs to make to build a sustainable competitive advantage.