Case Study Description of Argos Soditic--The Kermel Proposal
In April 2002, Guy Semmens, a partner in Argos Soditic, has to decide whether to take the lead in the management buyout (MBO) of Kermel, a niche player in the specialty fiber market. Invites participants to consider an MBO from the perspective of the private equity investor and answer the following questions: What is the fair value of Kermel? How should you structure the deal to provide incentives for management while generating adequate returns? What would be the exit strategy?
Swot Analysis of "Argos Soditic--The Kermel Proposal" written by Benoit Leleux, Henri Bourgeois includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kermel Argos facing as an external strategic factors. Some of the topics covered in Argos Soditic--The Kermel Proposal case study are - Strategic Management Strategies, Financial analysis, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Argos Soditic--The Kermel Proposal casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, technology disruption, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , there is increasing trade war between United States & China,
banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Argos Soditic--The Kermel Proposal
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Argos Soditic--The Kermel Proposal case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kermel Argos, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kermel Argos 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 Argos Soditic--The Kermel Proposal can be done for the following purposes –
1. Strategic planning using facts provided in Argos Soditic--The Kermel Proposal case study
2. Improving business portfolio management of Kermel Argos
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 Kermel Argos
Strengths Argos Soditic--The Kermel Proposal | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kermel Argos in Argos Soditic--The Kermel Proposal Harvard Business Review case study are -
Diverse revenue streams
– Kermel Argos is present in almost all the verticals within the industry. This has provided firm in Argos Soditic--The Kermel Proposal case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Training and development
– Kermel Argos has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Argos Soditic--The Kermel Proposal 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 Kermel Argos 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.
Strong track record of project management
– Kermel Argos is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Kermel Argos is one of the most innovative firm in sector. Manager in Argos Soditic--The Kermel Proposal Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Argos Soditic--The Kermel Proposal 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.
Low bargaining power of suppliers
– Suppliers of Kermel Argos in the sector have low bargaining power. Argos Soditic--The Kermel Proposal has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kermel Argos to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Kermel Argos 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 Argos Soditic--The Kermel Proposal HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Kermel Argos in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Kermel Argos has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kermel Argos 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Argos Soditic--The Kermel Proposal firm has clearly differentiated products in the market place. This has enabled Kermel Argos to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Kermel Argos to invest into research and development (R&D) and innovation.
High brand equity
– Kermel Argos has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kermel Argos to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Argos Soditic--The Kermel Proposal | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Argos Soditic--The Kermel Proposal are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Argos Soditic--The Kermel Proposal, is just above the industry average. Kermel Argos 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, Kermel Argos 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 Kermel Argos 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 - Argos Soditic--The Kermel Proposal should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Kermel Argos is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Kermel Argos needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kermel Argos to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Argos Soditic--The Kermel Proposal 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 Kermel Argos has relatively successful track record of launching new products.
Need for greater diversity
– Kermel Argos 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.
Aligning sales with marketing
– It come across in the case study Argos Soditic--The Kermel Proposal 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 Argos Soditic--The Kermel Proposal can leverage the sales team experience to cultivate customer relationships as Kermel Argos is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kermel Argos is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Argos Soditic--The Kermel Proposal 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 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 Kermel Argos supply chain. Even after few cautionary changes mentioned in the HBR case study - Argos Soditic--The Kermel Proposal, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kermel Argos vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Kermel Argos products
– To increase the profitability and margins on the products, Kermel Argos needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Kermel Argos 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.
Opportunities Argos Soditic--The Kermel Proposal | 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 Argos Soditic--The Kermel Proposal are -
Manufacturing automation
– Kermel Argos 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.
Building a culture of innovation
– managers at Kermel Argos 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kermel Argos can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kermel Argos is facing challenges because of the dominance of functional experts in the organization. Argos Soditic--The Kermel Proposal 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Kermel Argos 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, Argos Soditic--The Kermel Proposal, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Kermel Argos can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Kermel Argos in the consumer business. Now Kermel Argos can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Kermel Argos 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 Argos Soditic--The Kermel Proposal - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kermel Argos to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Kermel Argos 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.
Better consumer reach
– The expansion of the 5G network will help Kermel Argos to increase its market reach. Kermel Argos 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kermel Argos can use these opportunities to build new business models that can help the communities that Kermel Argos operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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. Kermel Argos 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. Kermel Argos 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.
Loyalty marketing
– Kermel Argos 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.
Threats Argos Soditic--The Kermel Proposal External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Argos Soditic--The Kermel Proposal are -
Technology acceleration in Forth Industrial Revolution
– Kermel Argos has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Kermel Argos 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 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. Kermel Argos needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Kermel Argos.
Stagnating economy with rate increase
– Kermel Argos 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kermel Argos with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Kermel Argos in the Strategy & Execution sector and impact the bottomline 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 Kermel Argos business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Kermel Argos is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Kermel Argos 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kermel Argos 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.
Regulatory challenges
– Kermel Argos 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kermel Argos 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 Argos Soditic--The Kermel Proposal .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Argos Soditic--The Kermel Proposal, Kermel Argos 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 .
Weighted SWOT Analysis of Argos Soditic--The Kermel Proposal 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 Argos Soditic--The Kermel Proposal 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 Argos Soditic--The Kermel Proposal 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 Argos Soditic--The Kermel Proposal 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 Argos Soditic--The Kermel Proposal 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 Kermel Argos needs to make to build a sustainable competitive advantage.