ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin
Russia has emerged as a dominant player especially in the natural gas segment of the global oil and gas industry. Its position of power has been cemented over the last decade on a variety of fronts ranging from the execution of the first offshore project, the first LNG project, the first Arctic exploration program, and the emergence of global giants, namely Gazprom and Rosneft, that have exerted considerable influence in attracting global super majors to Russia. The case study explores the execution of the two major Sakhalin projects that were instrumental in establishing Russia's position as a pre-eminent source of natural gas. These projects were among the earliest ones on a global scale that involved multiple global partners and were executed in a forbidding part of the country, offshore Russia in the Sea of Okhotsk. Both development deals were struck when Russia was in the midst of significant economic chaos following the breakup of the USSR into constituent republics. This period in Russian history was marked by significant opportunities as well as significant risks.
Swot Analysis of "ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin" written by Kannan Ramaswamy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Russia Sakhalin facing as an external strategic factors. Some of the topics covered in ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin casestudy better are - – wage bills are increasing, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels,
challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Russia Sakhalin, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Russia Sakhalin 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 ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin can be done for the following purposes –
1. Strategic planning using facts provided in ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin case study
2. Improving business portfolio management of Russia Sakhalin
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 Russia Sakhalin
Strengths ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Russia Sakhalin in ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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.
Cross disciplinary teams
– Horizontal connected teams at the Russia Sakhalin 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
– Russia Sakhalin is one of the leading recruiters in the industry. Managers in the ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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 Strategy & Execution industry
– ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin firm has clearly differentiated products in the market place. This has enabled Russia Sakhalin to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Russia Sakhalin to invest into research and development (R&D) and innovation.
Ability to lead change in Strategy & Execution field
– Russia Sakhalin 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 Russia Sakhalin in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Russia Sakhalin has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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.
High switching costs
– The high switching costs that Russia Sakhalin 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Russia Sakhalin digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Russia Sakhalin 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
– Russia Sakhalin 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 Kannan Ramaswamy 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.
Effective Research and Development (R&D)
– Russia Sakhalin 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 ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Russia Sakhalin 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
– Russia Sakhalin 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 ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin, is just above the industry average. Russia Sakhalin 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.
Capital Spending Reduction
– Even during the low interest decade, Russia Sakhalin 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.
Lack of clear differentiation of Russia Sakhalin products
– To increase the profitability and margins on the products, Russia Sakhalin needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin HBR case study mentions - Russia Sakhalin 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.
Low market penetration in new markets
– Outside its home market of Russia Sakhalin, firm in the HBR case study ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Russia Sakhalin has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High bargaining power of channel partners
– Because of the regulatory requirements, Kannan Ramaswamy suggests that, Russia Sakhalin 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.
High operating costs
– Compare to the competitors, firm in the HBR case study ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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 Russia Sakhalin 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin, 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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 Russia Sakhalin has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Russia Sakhalin is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Russia Sakhalin needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Russia Sakhalin to focus more on services rather than just following the product oriented approach.
Opportunities ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin | 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 ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin are -
Leveraging digital technologies
– Russia Sakhalin can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Russia Sakhalin can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Russia Sakhalin 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.
Learning at scale
– Online learning technologies has now opened space for Russia Sakhalin 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.
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 Russia Sakhalin in the consumer business. Now Russia Sakhalin can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Russia Sakhalin 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Russia Sakhalin 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 Russia Sakhalin 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 Russia Sakhalin 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.
Loyalty marketing
– Russia Sakhalin 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.
Building a culture of innovation
– managers at Russia Sakhalin 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.
Better consumer reach
– The expansion of the 5G network will help Russia Sakhalin to increase its market reach. Russia Sakhalin 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Russia Sakhalin 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. Russia Sakhalin 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Russia Sakhalin 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 ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin are -
Increasing wage structure of Russia Sakhalin
– 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 Russia Sakhalin.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin, Russia Sakhalin 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Russia Sakhalin 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 ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin .
Stagnating economy with rate increase
– Russia Sakhalin 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
– Russia Sakhalin 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Russia Sakhalin with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Russia Sakhalin 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 Russia Sakhalin in the Strategy & Execution sector and impact the bottomline of the organization.
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 Russia Sakhalin.
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.
Technology acceleration in Forth Industrial Revolution
– Russia Sakhalin has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Russia Sakhalin 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.
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. Russia Sakhalin 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.
Shortening product life cycle
– it is one of the major threat that Russia Sakhalin is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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 ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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 ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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 ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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 ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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 Russia Sakhalin needs to make to build a sustainable competitive advantage.