Case Study Description of ADP - GSI: The Integration Challenge
ADP signs its largest acquisition deal in history, to purchase GSI in August 1995. If the divergence of cultures in both companies isn't enough -- ADP management being used to tight controls and double-digit growth and GSI management groomed to run their own show in spite of recent poor financial results -- there are tremendous differences in operations across functional areas to resolve. Both companies have developed and positioned their unique product offerings to serve different market segments in distinct geographies. Consequently, the Sales and Customer Service organizations are also very different, with scopes and profiles that correspond to their own markets. Financial reporting practices are also divergent, for the most part due to country legislation. Human Resource practices are polar opposites. The reader is asked to take the position of Philippe Gluntz, the new President of ADP Europe, straddling the ocean to manage the post-acquisition process. The Expanded Version includes an overview of GSI and ADP, allowing the reader to address the integration challenge without reading the previous cases in the series.
Authors :: Yves L. Doz, Maurizio Zollo, Jeanne Larson
Swot Analysis of "ADP - GSI: The Integration Challenge" written by Yves L. Doz, Maurizio Zollo, Jeanne Larson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Adp Gsi facing as an external strategic factors. Some of the topics covered in ADP - GSI: The Integration Challenge case study are - Strategic Management Strategies, Mergers & acquisitions and Strategy & Execution.
Some of the macro environment factors that can be used to understand the ADP - GSI: The Integration Challenge casestudy better are - – wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, there is backlash against globalization, technology disruption, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%,
increasing government debt because of Covid-19 spendings, increasing energy prices, etc
Introduction to SWOT Analysis of ADP - GSI: The Integration Challenge
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ADP - GSI: The Integration Challenge case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Adp Gsi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Adp Gsi 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 ADP - GSI: The Integration Challenge can be done for the following purposes –
1. Strategic planning using facts provided in ADP - GSI: The Integration Challenge case study
2. Improving business portfolio management of Adp Gsi
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 Adp Gsi
Strengths ADP - GSI: The Integration Challenge | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Adp Gsi in ADP - GSI: The Integration Challenge Harvard Business Review case study are -
Learning organization
- Adp Gsi 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 Adp Gsi is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ADP - GSI: The Integration Challenge Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Adp Gsi is one of the leading recruiters in the industry. Managers in the ADP - GSI: The Integration Challenge are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Strategy & Execution field
– Adp Gsi 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 Adp Gsi in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Adp Gsi is present in almost all the verticals within the industry. This has provided firm in ADP - GSI: The Integration Challenge 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.
Superior customer experience
– The customer experience strategy of Adp Gsi in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Adp Gsi 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 ADP - GSI: The Integration Challenge - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Strategy & Execution industry
– ADP - GSI: The Integration Challenge firm has clearly differentiated products in the market place. This has enabled Adp Gsi to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Adp Gsi to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Adp Gsi has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Adp Gsi 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Adp Gsi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Adp Gsi 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.
Highly skilled collaborators
– Adp Gsi 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 ADP - GSI: The Integration Challenge 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 Adp Gsi 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.
Innovation driven organization
– Adp Gsi is one of the most innovative firm in sector. Manager in ADP - GSI: The Integration Challenge Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses ADP - GSI: The Integration Challenge | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ADP - GSI: The Integration Challenge are -
Skills based hiring
– The stress on hiring functional specialists at Adp Gsi 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study ADP - GSI: The Integration Challenge, in the dynamic environment Adp Gsi has struggled to respond to the nimble upstart competition. Adp Gsi has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Adp Gsi products
– To increase the profitability and margins on the products, Adp Gsi needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Adp Gsi 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.
Capital Spending Reduction
– Even during the low interest decade, Adp Gsi has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ADP - GSI: The Integration Challenge, is just above the industry average. Adp Gsi 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.
Low market penetration in new markets
– Outside its home market of Adp Gsi, firm in the HBR case study ADP - GSI: The Integration Challenge needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study ADP - GSI: The Integration Challenge, it seems that the employees of Adp Gsi 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Adp Gsi needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– Adp Gsi has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High bargaining power of channel partners
– Because of the regulatory requirements, Yves L. Doz, Maurizio Zollo, Jeanne Larson suggests that, Adp Gsi 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.
Opportunities ADP - GSI: The Integration Challenge | 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 ADP - GSI: The Integration Challenge are -
Creating value in data economy
– The success of analytics program of Adp Gsi has opened avenues for new revenue streams for the organization in the industry. This can help Adp Gsi to build a more holistic ecosystem as suggested in the ADP - GSI: The Integration Challenge case study. Adp Gsi can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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, Adp Gsi can use these opportunities to build new business models that can help the communities that Adp Gsi operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Adp Gsi is facing challenges because of the dominance of functional experts in the organization. ADP - GSI: The Integration Challenge 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Adp Gsi 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.
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. Adp Gsi 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. Adp Gsi 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.
Leveraging digital technologies
– Adp Gsi 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.
Better consumer reach
– The expansion of the 5G network will help Adp Gsi to increase its market reach. Adp Gsi 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.
Building a culture of innovation
– managers at Adp Gsi 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, Adp Gsi 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, ADP - GSI: The Integration Challenge, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Adp Gsi 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 Adp Gsi to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Adp Gsi 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 ADP - GSI: The Integration Challenge - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Adp Gsi to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Adp Gsi 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Adp Gsi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats ADP - GSI: The Integration Challenge External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ADP - GSI: The Integration Challenge 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. Adp Gsi needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Consumer confidence and its impact on Adp Gsi 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 wage structure of Adp Gsi
– 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 Adp Gsi.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Adp Gsi with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Adp Gsi in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Adp Gsi 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Adp Gsi 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 ADP - GSI: The Integration Challenge .
Stagnating economy with rate increase
– Adp Gsi 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.
Technology acceleration in Forth Industrial Revolution
– Adp Gsi has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Adp Gsi 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.
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. Adp Gsi can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Adp Gsi 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.
Regulatory challenges
– Adp Gsi 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.
Weighted SWOT Analysis of ADP - GSI: The Integration Challenge 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 ADP - GSI: The Integration Challenge 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 ADP - GSI: The Integration Challenge 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 ADP - GSI: The Integration Challenge 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 ADP - GSI: The Integration Challenge 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 Adp Gsi needs to make to build a sustainable competitive advantage.