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 - – increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, wage bills are increasing, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, geopolitical disruptions,
cloud computing is disrupting traditional business models, there is backlash against globalization, 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 -
Ability to recruit top talent
– Ernst Gemini is one of the leading recruiters in the industry. Managers in the Cap Gemini Ernst & Young: A Global Merger (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Ernst Gemini has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ernst Gemini to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
Operational resilience
– The operational resilience strategy in the Cap Gemini Ernst & Young: A Global Merger (A) 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
– 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.
Learning organization
- Ernst Gemini 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 Ernst Gemini is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Cap Gemini Ernst & Young: A Global Merger (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
Need for greater diversity
– Ernst Gemini 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.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ernst Gemini is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Cap Gemini Ernst & Young: A Global Merger (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Cap Gemini Ernst & Young: A Global Merger (A) 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 Ernst Gemini 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Cap Gemini Ernst & Young: A Global Merger (A), it seems that the employees of Ernst Gemini 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.
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Ernst Gemini has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Opportunities 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 -
Low interest rates
– Even though inflation is raising its head in most developed economies, Ernst Gemini 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ernst Gemini 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.
Developing new processes and practices
– Ernst Gemini can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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. Ernst Gemini can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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 Ernst Gemini in the consumer business. Now Ernst Gemini can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ernst Gemini can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Ernst Gemini 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. Ernst Gemini 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
– 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.
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.
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 -
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.
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) .
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. Ernst Gemini 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.
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.
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.
Increasing wage structure of Ernst Gemini
– 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 Ernst Gemini.
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.
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 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. Ernst Gemini needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Ernst Gemini.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Cap Gemini Ernst & Young: A Global Merger (A), Ernst Gemini 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 .
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.
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.