Pak Arab Refinery Limited (PARCO) - Management of Circular Debt SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
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Case Study SWOT Analysis Solution
Case Study Description of Pak Arab Refinery Limited (PARCO) - Management of Circular Debt
The case describes how a very large intra-corporate debt was built up in Pakistan, among the private and public sector energy and power generation companies that were some of the country's largest organizations. An unexpected slowdown in recovery of bills created a debt that affected corporate business operations, and the Pakistani economy as a whole. The energy and power sectors are discussed, as are the reasons for this circular debt. The Pakistani government was heavily involved in regulating the energy and power sectors; in 2008, to respond to high oil prices a subsidy was provided to keep the price of diesel low. The government, however, had not created an effective plan to recover these funds, and when large public sector enterprises (PSEs) such as Pakistan International Airlines (PIA) did not pay their bills, no action was taken. The focus of this case is on resolving the very large amounts of debt that had accumulated in various energy companies. A secondary analysis can explore the impact of regulation on the operations of oil companies.
Swot Analysis of "Pak Arab Refinery Limited (PARCO) - Management of Circular Debt" written by Muntazar B. Ahmed includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Debt Pakistani facing as an external strategic factors. Some of the topics covered in Pak Arab Refinery Limited (PARCO) - Management of Circular Debt case study are - Strategic Management Strategies, Government, International business, Performance measurement, Recession, Strategy and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Pak Arab Refinery Limited (PARCO) - Management of Circular Debt casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, wage bills are increasing, supply chains are disrupted by pandemic , technology disruption, central banks are concerned over increasing inflation,
increasing transportation and logistics costs, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Pak Arab Refinery Limited (PARCO) - Management of Circular Debt
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Pak Arab Refinery Limited (PARCO) - Management of Circular Debt case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Debt Pakistani, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Debt Pakistani 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 Pak Arab Refinery Limited (PARCO) - Management of Circular Debt can be done for the following purposes –
1. Strategic planning using facts provided in Pak Arab Refinery Limited (PARCO) - Management of Circular Debt case study
2. Improving business portfolio management of Debt Pakistani
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Debt Pakistani
Strengths Pak Arab Refinery Limited (PARCO) - Management of Circular Debt | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Debt Pakistani in Pak Arab Refinery Limited (PARCO) - Management of Circular Debt Harvard Business Review case study are -
High switching costs
– The high switching costs that Debt Pakistani 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.
Cross disciplinary teams
– Horizontal connected teams at the Debt Pakistani 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.
Ability to recruit top talent
– Debt Pakistani is one of the leading recruiters in the industry. Managers in the Pak Arab Refinery Limited (PARCO) - Management of Circular Debt are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Finance & Accounting industry
– Pak Arab Refinery Limited (PARCO) - Management of Circular Debt firm has clearly differentiated products in the market place. This has enabled Debt Pakistani to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Debt Pakistani to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Debt Pakistani 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 Pak Arab Refinery Limited (PARCO) - Management of Circular Debt - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Debt Pakistani is one of the most innovative firm in sector. Manager in Pak Arab Refinery Limited (PARCO) - Management of Circular Debt Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Finance & Accounting field
– Debt Pakistani 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 Debt Pakistani in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Debt Pakistani is present in almost all the verticals within the industry. This has provided firm in Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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.
Learning organization
- Debt Pakistani 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 Debt Pakistani is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Pak Arab Refinery Limited (PARCO) - Management of Circular Debt Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Debt Pakistani digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Debt Pakistani 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.
Analytics focus
– Debt Pakistani 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 Muntazar B. Ahmed 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 brand equity
– Debt Pakistani has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Debt Pakistani to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Pak Arab Refinery Limited (PARCO) - Management of Circular Debt | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pak Arab Refinery Limited (PARCO) - Management of Circular Debt are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Pak Arab Refinery Limited (PARCO) - Management of Circular Debt, in the dynamic environment Debt Pakistani has struggled to respond to the nimble upstart competition. Debt Pakistani has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Debt Pakistani supply chain. Even after few cautionary changes mentioned in the HBR case study - Pak Arab Refinery Limited (PARCO) - Management of Circular Debt, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Debt Pakistani vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Pak Arab Refinery Limited (PARCO) - Management of Circular Debt, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Aligning sales with marketing
– It come across in the case study Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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 Pak Arab Refinery Limited (PARCO) - Management of Circular Debt can leverage the sales team experience to cultivate customer relationships as Debt Pakistani is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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 Debt Pakistani 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Debt Pakistani is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Debt Pakistani needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Debt Pakistani to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Debt Pakistani 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.
Low market penetration in new markets
– Outside its home market of Debt Pakistani, firm in the HBR case study Pak Arab Refinery Limited (PARCO) - Management of Circular Debt needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Muntazar B. Ahmed suggests that, Debt Pakistani 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.
Need for greater diversity
– Debt Pakistani 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.
Capital Spending Reduction
– Even during the low interest decade, Debt Pakistani 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.
Opportunities Pak Arab Refinery Limited (PARCO) - Management of Circular Debt | 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 Pak Arab Refinery Limited (PARCO) - Management of Circular Debt are -
Loyalty marketing
– Debt Pakistani 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.
Developing new processes and practices
– Debt Pakistani can develop new processes and procedures in Finance & Accounting 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Debt Pakistani 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.
Creating value in data economy
– The success of analytics program of Debt Pakistani has opened avenues for new revenue streams for the organization in the industry. This can help Debt Pakistani to build a more holistic ecosystem as suggested in the Pak Arab Refinery Limited (PARCO) - Management of Circular Debt case study. Debt Pakistani 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 Debt Pakistani 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 Debt Pakistani to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Debt Pakistani is facing challenges because of the dominance of functional experts in the organization. Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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 Finance & Accounting industry, but it has also influenced the consumer preferences. Debt Pakistani can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Debt Pakistani 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 Pak Arab Refinery Limited (PARCO) - Management of Circular Debt - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Debt Pakistani to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Debt Pakistani 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. Debt Pakistani 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Debt Pakistani in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Debt Pakistani can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Debt Pakistani 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, Pak Arab Refinery Limited (PARCO) - Management of Circular Debt, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Debt Pakistani to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Threats Pak Arab Refinery Limited (PARCO) - Management of Circular Debt External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Pak Arab Refinery Limited (PARCO) - Management of Circular Debt are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Debt Pakistani 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 Pak Arab Refinery Limited (PARCO) - Management of Circular Debt .
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Debt Pakistani 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 Debt Pakistani business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Debt Pakistani
– 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 Debt Pakistani.
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. Debt Pakistani needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Debt Pakistani with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Debt Pakistani in the Finance & Accounting industry. The Finance & Accounting 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.
Technology acceleration in Forth Industrial Revolution
– Debt Pakistani has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Debt Pakistani needs to keep up with the evolution of technology in the Finance & Accounting 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.
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.
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 Debt Pakistani.
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.
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. Debt Pakistani 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.
High dependence on third party suppliers
– Debt Pakistani 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.
Weighted SWOT Analysis of Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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 Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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 Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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 Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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 Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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 Debt Pakistani needs to make to build a sustainable competitive advantage.