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 - – wage bills are increasing, increasing energy prices, talent flight as more people leaving formal jobs, there is backlash against globalization, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs,
there is increasing trade war between United States & China, geopolitical disruptions, 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 -
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.
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.
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.
Strong track record of project management
– Ernst Gemini is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Ernst Gemini digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ernst Gemini 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.
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.
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.
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.
Ability to lead change in Strategy & Execution field
– Ernst Gemini 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 Ernst Gemini in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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 -
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.
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.
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 Ernst Gemini supply chain. Even after few cautionary changes mentioned in the HBR case study - Cap Gemini Ernst & Young: A Global Merger (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ernst Gemini vulnerable to further global disruptions in South East Asia.
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.
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.
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 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.
Increasing silos among functional specialists
– The organizational structure of Ernst Gemini is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Ernst Gemini needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ernst Gemini to focus more on services rather than just following the product oriented approach.
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.
Slow decision making process
– As mentioned earlier in the report, Ernst Gemini 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. Ernst Gemini 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.
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 -
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Ernst Gemini 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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
Regulatory challenges
– Ernst Gemini 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.
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.
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.
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.
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.
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 .
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.
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.
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.
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.
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.
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.
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.