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 - – there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google,
increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
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.
Superior customer experience
– The customer experience strategy of Debt Pakistani in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Debt Pakistani is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
Operational resilience
– The operational resilience strategy in the Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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
– Debt Pakistani has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Debt Pakistani 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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Debt Pakistani in the sector have low bargaining power. Pak Arab Refinery Limited (PARCO) - Management of Circular Debt has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Debt Pakistani to manage not only supply disruptions but also source products at highly competitive prices.
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.
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 -
Skills based hiring
– The stress on hiring functional specialists at Debt Pakistani 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Debt Pakistani is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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 Debt Pakistani has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Pak Arab Refinery Limited (PARCO) - Management of Circular Debt HBR case study mentions - Debt Pakistani 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.
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.
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.
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.
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.
Slow decision making process
– As mentioned earlier in the report, Debt Pakistani 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. Debt Pakistani 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.
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.
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.
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 -
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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Debt Pakistani can use these opportunities to build new business models that can help the communities that Debt Pakistani operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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.
Building a culture of innovation
– managers at Debt Pakistani 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 Finance & Accounting segment.
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. Debt Pakistani can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Debt Pakistani 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.
Buying journey improvements
– Debt Pakistani can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Pak Arab Refinery Limited (PARCO) - Management of Circular Debt 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, 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.
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.
Manufacturing automation
– Debt Pakistani can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
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.
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 -
Consumer confidence and its impact on Debt Pakistani 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Pak Arab Refinery Limited (PARCO) - Management of Circular Debt, Debt Pakistani may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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.
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.
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.
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.
Regulatory challenges
– Debt Pakistani 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 Finance & Accounting industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Debt Pakistani 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. Debt Pakistani can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 .
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.
Stagnating economy with rate increase
– Debt Pakistani 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.
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.
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.
