Ransom on the High Seas: The Case of Piracy in Somalia SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Ransom on the High Seas: The Case of Piracy in Somalia
The setting of this case is off the coast of the failed state of Somalia, where incidents of piracy have increased dramatically over the past few years. In this case a group of 14 pirates have hijacked a cargo ship full of machinery, but have yet to make any demands. They hold the multinational crew of 20 (whose captain and two officers are American), the ship, and the cargo hostage. The Chief Operating Officer of an international shipping company must choose among alternative strategies to get the crew, cargo and ship, back safely with as little cost as possible.
Authors :: Alvaro Cuervo-Cazurra, Michael Train, Jeanne M. McNett
Swot Analysis of "Ransom on the High Seas: The Case of Piracy in Somalia" written by Alvaro Cuervo-Cazurra, Michael Train, Jeanne M. McNett includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cargo Ship facing as an external strategic factors. Some of the topics covered in Ransom on the High Seas: The Case of Piracy in Somalia case study are - Strategic Management Strategies, Leadership, Organizational culture, Risk management, Social responsibility and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Ransom on the High Seas: The Case of Piracy in Somalia casestudy better are - – increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, there is backlash against globalization,
increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Ransom on the High Seas: The Case of Piracy in Somalia
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ransom on the High Seas: The Case of Piracy in Somalia case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cargo Ship, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cargo Ship 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 Ransom on the High Seas: The Case of Piracy in Somalia can be done for the following purposes –
1. Strategic planning using facts provided in Ransom on the High Seas: The Case of Piracy in Somalia case study
2. Improving business portfolio management of Cargo Ship
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 Cargo Ship
Strengths Ransom on the High Seas: The Case of Piracy in Somalia | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cargo Ship in Ransom on the High Seas: The Case of Piracy in Somalia Harvard Business Review case study are -
Ability to recruit top talent
– Cargo Ship is one of the leading recruiters in the industry. Managers in the Ransom on the High Seas: The Case of Piracy in Somalia are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Cargo Ship
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cargo Ship does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Cargo Ship is one of the most innovative firm in sector. Manager in Ransom on the High Seas: The Case of Piracy in Somalia Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Cargo Ship has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cargo Ship 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.
Low bargaining power of suppliers
– Suppliers of Cargo Ship in the sector have low bargaining power. Ransom on the High Seas: The Case of Piracy in Somalia has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cargo Ship to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Cargo Ship digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cargo Ship 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.
High switching costs
– The high switching costs that Cargo Ship 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
– Cargo Ship is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Cargo Ship 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 Ransom on the High Seas: The Case of Piracy in Somalia HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Cargo Ship 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 Cargo Ship is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Ransom on the High Seas: The Case of Piracy in Somalia Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Cargo Ship 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)
– Cargo Ship 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 Ransom on the High Seas: The Case of Piracy in Somalia - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Ransom on the High Seas: The Case of Piracy in Somalia | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ransom on the High Seas: The Case of Piracy in Somalia are -
Skills based hiring
– The stress on hiring functional specialists at Cargo Ship 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Ransom on the High Seas: The Case of Piracy in Somalia 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 Cargo Ship 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Ransom on the High Seas: The Case of Piracy in Somalia, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
High cash cycle compare to competitors
Cargo Ship has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– It come across in the case study Ransom on the High Seas: The Case of Piracy in Somalia 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 Ransom on the High Seas: The Case of Piracy in Somalia can leverage the sales team experience to cultivate customer relationships as Cargo Ship is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Ransom on the High Seas: The Case of Piracy in Somalia, is just above the industry average. Cargo Ship 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ransom on the High Seas: The Case of Piracy in Somalia, in the dynamic environment Cargo Ship has struggled to respond to the nimble upstart competition. Cargo Ship has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Cargo Ship, firm in the HBR case study Ransom on the High Seas: The Case of Piracy in Somalia needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Cargo Ship supply chain. Even after few cautionary changes mentioned in the HBR case study - Ransom on the High Seas: The Case of Piracy in Somalia, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cargo Ship vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Cargo Ship 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Ransom on the High Seas: The Case of Piracy in Somalia, it seems that the employees of Cargo Ship 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.
Opportunities Ransom on the High Seas: The Case of Piracy in Somalia | 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 Ransom on the High Seas: The Case of Piracy in Somalia are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cargo Ship is facing challenges because of the dominance of functional experts in the organization. Ransom on the High Seas: The Case of Piracy in Somalia 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.
Developing new processes and practices
– Cargo Ship can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Using analytics as competitive advantage
– Cargo Ship 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 Ransom on the High Seas: The Case of Piracy in Somalia - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cargo Ship to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Cargo Ship has opened avenues for new revenue streams for the organization in the industry. This can help Cargo Ship to build a more holistic ecosystem as suggested in the Ransom on the High Seas: The Case of Piracy in Somalia case study. Cargo Ship 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, Cargo Ship can use these opportunities to build new business models that can help the communities that Cargo Ship 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, Cargo Ship 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Cargo Ship in the consumer business. Now Cargo Ship can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Cargo Ship can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ransom on the High Seas: The Case of Piracy in Somalia 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cargo Ship 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, Ransom on the High Seas: The Case of Piracy in Somalia, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Cargo Ship to increase its market reach. Cargo Ship 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cargo Ship 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cargo Ship can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Cargo Ship can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Ransom on the High Seas: The Case of Piracy in Somalia External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ransom on the High Seas: The Case of Piracy in Somalia are -
Technology acceleration in Forth Industrial Revolution
– Cargo Ship has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cargo Ship 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cargo Ship 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.
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.
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. Cargo Ship can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Cargo Ship 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.
Environmental challenges
– Cargo Ship 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. Cargo Ship can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Cargo Ship business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Cargo Ship is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Cargo Ship.
Regulatory challenges
– Cargo Ship 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.
High dependence on third party suppliers
– Cargo Ship 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.
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 Cargo Ship in the Strategy & Execution sector and impact the bottomline of the organization.
Consumer confidence and its impact on Cargo Ship 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.
Weighted SWOT Analysis of Ransom on the High Seas: The Case of Piracy in Somalia 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 Ransom on the High Seas: The Case of Piracy in Somalia 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 Ransom on the High Seas: The Case of Piracy in Somalia 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 Ransom on the High Seas: The Case of Piracy in Somalia 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 Ransom on the High Seas: The Case of Piracy in Somalia 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 Cargo Ship needs to make to build a sustainable competitive advantage.