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 - – digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions,
technology disruption, increasing transportation and logistics costs, 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 -
Operational resilience
– The operational resilience strategy in the Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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.
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.
Superior customer experience
– The customer experience strategy of Cummins Decree in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
Training and development
– Cummins Decree has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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.
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.
Learning organization
- Cummins Decree 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 Cummins Decree is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Successful track record of launching new products
– Cummins Decree has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cummins Decree has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Diverse revenue streams
– Cummins Decree is present in almost all the verticals within the industry. This has provided firm in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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.
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 -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision., is just above the industry average. Cummins Decree 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.
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.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cummins Decree is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Cummins Decree 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.
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 star products
– The top 2 products and services of the firm as mentioned in the Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Cummins Decree has relatively successful track record of launching new products.
Lack of clear differentiation of Cummins Decree products
– To increase the profitability and margins on the products, Cummins Decree needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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 -
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cummins Decree 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, Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision., to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Cummins Decree in the consumer business. Now Cummins Decree can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
Creating value in data economy
– The success of analytics program of Cummins Decree has opened avenues for new revenue streams for the organization in the industry. This can help Cummins Decree to build a more holistic ecosystem as suggested in the Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. case study. Cummins Decree can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Cummins Decree 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.
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. Cummins Decree 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. Cummins Decree 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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cummins Decree 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.
Better consumer reach
– The expansion of the 5G network will help Cummins Decree to increase its market reach. Cummins Decree 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.
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.
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 -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Cummins Decree needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
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.
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. .
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.
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. Cummins Decree 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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cummins Decree with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Technology acceleration in Forth Industrial Revolution
– Cummins Decree has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cummins Decree needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cummins Decree 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.
Stagnating economy with rate increase
– Cummins Decree 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.
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.
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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