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 - – increasing household debt because of falling income levels, there is increasing trade war between United States & China, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, 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 -
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.
High brand equity
– Russia Sakhalin has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Russia Sakhalin to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Russia Sakhalin in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Russia Sakhalin
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Russia Sakhalin does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Learning organization
- Russia Sakhalin 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 Russia Sakhalin is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
Innovation driven organization
– Russia Sakhalin is one of the most innovative firm in sector. Manager in ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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 Russia Sakhalin in the sector have low bargaining power. ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Russia Sakhalin to manage not only supply disruptions but also source products at highly competitive prices.
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.
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 -
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.
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.
Products dominated business model
– Even though Russia Sakhalin has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin should strive to include more intangible value offerings along with its core products and services.
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.
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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin, it seems that the employees of Russia Sakhalin 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.
Interest costs
– Compare to the competition, Russia Sakhalin 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 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Russia Sakhalin needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
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 -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Russia Sakhalin 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, ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin, 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 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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Russia Sakhalin can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
Buying journey improvements
– Russia Sakhalin can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Russia Sakhalin is facing challenges because of the dominance of functional experts in the organization. ExxonMobil and Royal Dutch Shell: The Tale of Two Projects in Sakhalin 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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Russia Sakhalin 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.
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. Russia Sakhalin can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Russia Sakhalin 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.
Environmental challenges
– Russia Sakhalin 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. Russia Sakhalin can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
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.
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.
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.
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.
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 .
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.
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.
High dependence on third party suppliers
– Russia Sakhalin 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.
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.
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.