Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision.
In 1998, the United States Environmental Protection Agency (EPA) and US manufacturers of heavy-duty diesel engines signed a consent decree which included among other things, pulling forward ("pull ahead") by 15 months a new nitrogen oxide (NOx) emission standard. By early 2002, Caterpillar and Detroit Diesel were requesting EPA to delay the "pull ahead". Cummins was being pressured by its competitors to join in this request. On the other side, the Environmental Protection Agency (EPA) and several environmental organizations wanted Cummins to adhere to the requirements of the consent decree. Cummins was navigating through a very difficult economic time and could not afford to make a mistake. Joe Loughrey, Cummins Engine Business President and his team needed to make a strategic decision. Would they a) agree with the competitors' position asking EPA to delay the consent decree which required the company to pull ahead an expensive environment requirement, thus allowing manufacturers to continue using the established engine technology that had customer support, or b) accept the terms of the consent decree and continue to develop a new engine technology against the wishes of many in the industry and thus face possible market retraction. Both strategic decision options had substantial consequences and needed to be carefully evaluated. Not only was the future of Cummins Engine Business in jeopardy, but as we learn later, this decision impacted the future of the whole industry.
Swot Analysis of "Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision." written by Erica Berte, Christine Vujovich includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cummins Decree facing as an external strategic factors. Some of the topics covered in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. case study are - Strategic Management Strategies, Competitive strategy, Corporate governance, Organizational culture, Social responsibility and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, wage bills are increasing, technology disruption, geopolitical disruptions, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy,
digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cummins Decree, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cummins Decree 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. can be done for the following purposes –
1. Strategic planning using facts provided in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. case study
2. Improving business portfolio management of Cummins Decree
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 Cummins Decree
Strengths Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cummins Decree in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. Harvard Business Review case study are -
Organizational Resilience of Cummins Decree
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cummins Decree does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Cummins Decree is one of the most innovative firm in sector. Manager in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Cummins Decree digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cummins Decree 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
– Cummins Decree 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 Erica Berte, Christine Vujovich 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.
Ability to lead change in Strategy & Execution field
– Cummins Decree 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 Cummins Decree in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Cummins Decree has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cummins Decree to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Cummins Decree is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Cummins Decree 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.
Highly skilled collaborators
– Cummins Decree 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Cummins Decree in the sector have low bargaining power. Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cummins Decree to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Strategy & Execution industry
– Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. firm has clearly differentiated products in the market place. This has enabled Cummins Decree to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Cummins Decree to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Cummins Decree 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. are -
High bargaining power of channel partners
– Because of the regulatory requirements, Erica Berte, Christine Vujovich suggests that, Cummins Decree 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Cummins Decree 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision., it seems that the employees of Cummins Decree 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.
Slow to strategic competitive environment developments
– As Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. HBR case study mentions - Cummins Decree 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.
Products dominated business model
– Even though Cummins Decree 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 - Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. should strive to include more intangible value offerings along with its core products and services.
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 Cummins Decree supply chain. Even after few cautionary changes mentioned in the HBR case study - Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision., it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cummins Decree vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Cummins Decree 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 cash cycle compare to competitors
Cummins Decree 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.
Increasing silos among functional specialists
– The organizational structure of Cummins Decree is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cummins Decree needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cummins Decree to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. can leverage the sales team experience to cultivate customer relationships as Cummins Decree is planning to shift buying processes online.
Need for greater diversity
– Cummins Decree 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.
Opportunities Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. | 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. are -
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. Cummins Decree can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Cummins Decree 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cummins Decree can use these opportunities to build new business models that can help the communities that Cummins Decree operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Buying journey improvements
– Cummins Decree can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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.
Building a culture of innovation
– managers at Cummins Decree 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.
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. Cummins Decree can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Cummins Decree 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cummins Decree to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cummins Decree 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 Cummins Decree to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cummins Decree 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cummins Decree is facing challenges because of the dominance of functional experts in the organization. Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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.
Leveraging digital technologies
– Cummins Decree 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 Cummins Decree 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 Cummins Decree can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. are -
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 Cummins Decree in the Strategy & Execution sector and impact the bottomline of the organization.
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.
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 Cummins Decree business can come under increasing regulations regarding data privacy, data security, etc.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cummins Decree 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision., Cummins Decree 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 .
Shortening product life cycle
– it is one of the major threat that Cummins Decree is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Cummins Decree 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.
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 Cummins Decree.
Increasing wage structure of Cummins Decree
– 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 Cummins Decree.
Consumer confidence and its impact on Cummins Decree 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.
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. Cummins Decree can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Cummins Decree 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.
Weighted SWOT Analysis of Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Cummins Decree needs to make to build a sustainable competitive advantage.
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