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 - – challanges to central banks by blockchain based private currencies, wage bills are increasing, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic ,
increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, 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.
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.
Ability to lead change in Strategy & Execution field
– Cargo Ship 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 Cargo Ship in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Cargo Ship has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cargo Ship to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Cargo Ship 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.
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.
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.
Diverse revenue streams
– Cargo Ship is present in almost all the verticals within the industry. This has provided firm in Ransom on the High Seas: The Case of Piracy in Somalia 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.
Training and development
– Cargo Ship has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Ransom on the High Seas: The Case of Piracy in Somalia Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Operational resilience
– The operational resilience strategy in the Ransom on the High Seas: The Case of Piracy in Somalia 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.
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.
Sustainable margins compare to other players in Strategy & Execution industry
– Ransom on the High Seas: The Case of Piracy in Somalia firm has clearly differentiated products in the market place. This has enabled Cargo Ship to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Cargo Ship to invest into research and development (R&D) and innovation.
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 -
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.
Interest costs
– Compare to the competition, Cargo Ship 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 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.
Slow decision making process
– As mentioned earlier in the report, Cargo Ship 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. Cargo Ship 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.
Lack of clear differentiation of Cargo Ship products
– To increase the profitability and margins on the products, Cargo Ship needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Cargo Ship 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 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Ransom on the High Seas: The Case of Piracy in Somalia 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 Cargo Ship has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Cargo Ship is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cargo Ship needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cargo Ship to focus more on services rather than just following the product oriented approach.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Alvaro Cuervo-Cazurra, Michael Train, Jeanne M. McNett suggests that, Cargo Ship 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 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 -
Manufacturing automation
– Cargo Ship 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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cargo Ship 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 Cargo Ship to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Cargo Ship 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.
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.
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.
Building a culture of innovation
– managers at Cargo Ship 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, 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.
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.
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.
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.
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.
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.
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 -
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cargo Ship with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Ransom on the High Seas: The Case of Piracy in Somalia, Cargo Ship may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Increasing wage structure of Cargo Ship
– 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 Cargo Ship.
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 Cargo Ship.
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.
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.
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.
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.
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.