Case Study Description of Cytec Industries' Spin-Off (A): Sink or Swim?
In the wake of market pressure to restructure, American Cyanamid spun off its poorly performing Chemicals Unit into a new publicly traded corporation, Cytec Industries. In addition to weak operations, Cytec inherited the bulk of Cyanamid's environmental and post-retirement health-care liabilities. The market's assessment of Cytec's prospects was grim. Cytec's managers, all long-time Cyanamid employees, were enthusiastic. They believed they could implement changes in Cytec's strategy and corporate culture that would bring about dramatic performance improvement. The spin-off gave Cytec the opportunity to change management style and adopt practices that were more effective and more suitable to its businesses. This case explores the organizational and managerial implications of spin-off transactions.
Swot Analysis of "Cytec Industries' Spin-Off (A): Sink or Swim?" written by Karen H. Wruck, Sherry Pelkey Roper includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cytec Cytec's facing as an external strategic factors. Some of the topics covered in Cytec Industries' Spin-Off (A): Sink or Swim? case study are - Strategic Management Strategies, Costs, Organizational structure, Reorganization and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Cytec Industries' Spin-Off (A): Sink or Swim? casestudy better are - – geopolitical disruptions, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, talent flight as more people leaving formal jobs, there is backlash against globalization, 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%, technology disruption, etc
Introduction to SWOT Analysis of Cytec Industries' Spin-Off (A): Sink or Swim?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cytec Industries' Spin-Off (A): Sink or Swim? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cytec Cytec's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cytec Cytec's 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 Cytec Industries' Spin-Off (A): Sink or Swim? can be done for the following purposes –
1. Strategic planning using facts provided in Cytec Industries' Spin-Off (A): Sink or Swim? case study
2. Improving business portfolio management of Cytec Cytec's
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 Cytec Cytec's
Strengths Cytec Industries' Spin-Off (A): Sink or Swim? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cytec Cytec's in Cytec Industries' Spin-Off (A): Sink or Swim? Harvard Business Review case study are -
Organizational Resilience of Cytec Cytec's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cytec Cytec's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Cytec Cytec's 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.
Operational resilience
– The operational resilience strategy in the Cytec Industries' Spin-Off (A): Sink or Swim? 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 switching costs
– The high switching costs that Cytec Cytec's 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.
Innovation driven organization
– Cytec Cytec's is one of the most innovative firm in sector. Manager in Cytec Industries' Spin-Off (A): Sink or Swim? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Cytec Cytec's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cytec Cytec's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Cytec Cytec's in the sector have low bargaining power. Cytec Industries' Spin-Off (A): Sink or Swim? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cytec Cytec's to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Strategy & Execution field
– Cytec Cytec's 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 Cytec Cytec's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Cytec Cytec's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Cytec Cytec's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cytec Cytec's 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.
Highly skilled collaborators
– Cytec Cytec's 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 Cytec Industries' Spin-Off (A): Sink or Swim? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Cytec Cytec's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Cytec Industries' Spin-Off (A): Sink or Swim? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Cytec Industries' Spin-Off (A): Sink or Swim? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cytec Industries' Spin-Off (A): Sink or Swim? are -
Increasing silos among functional specialists
– The organizational structure of Cytec Cytec's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cytec Cytec's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cytec Cytec's to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Cytec Cytec's 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cytec Cytec's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Cytec Industries' Spin-Off (A): Sink or Swim? 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, Karen H. Wruck, Sherry Pelkey Roper suggests that, Cytec Cytec's 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 Cytec Industries' Spin-Off (A): Sink or Swim? 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 Cytec Cytec's 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Cytec Industries' Spin-Off (A): Sink or Swim? 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 Cytec Cytec's has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Cytec Industries' Spin-Off (A): Sink or Swim? HBR case study mentions - Cytec Cytec's 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.
Aligning sales with marketing
– It come across in the case study Cytec Industries' Spin-Off (A): Sink or Swim? 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 Cytec Industries' Spin-Off (A): Sink or Swim? can leverage the sales team experience to cultivate customer relationships as Cytec Cytec's is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Cytec Industries' Spin-Off (A): Sink or Swim?, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High dependence on 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 Cytec Cytec's supply chain. Even after few cautionary changes mentioned in the HBR case study - Cytec Industries' Spin-Off (A): Sink or Swim?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cytec Cytec's vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Cytec Cytec's 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 Cytec Industries' Spin-Off (A): Sink or Swim? | 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 Cytec Industries' Spin-Off (A): Sink or Swim? are -
Loyalty marketing
– Cytec Cytec's 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.
Manufacturing automation
– Cytec Cytec's 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.
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. Cytec Cytec's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Cytec Cytec's 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. Cytec Cytec's 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cytec Cytec's 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 Cytec Cytec's to increase its market reach. Cytec Cytec's 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.
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. Cytec Cytec's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cytec Cytec's is facing challenges because of the dominance of functional experts in the organization. Cytec Industries' Spin-Off (A): Sink or Swim? 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cytec Cytec's can use these opportunities to build new business models that can help the communities that Cytec Cytec's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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 Cytec Cytec's in the consumer business. Now Cytec Cytec's can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cytec Cytec's 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, Cytec Industries' Spin-Off (A): Sink or Swim?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cytec Cytec's 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 Cytec Cytec's to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cytec Cytec's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Cytec Industries' Spin-Off (A): Sink or Swim? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cytec Industries' Spin-Off (A): Sink or Swim? are -
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 Cytec Cytec's business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cytec Cytec's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Cytec Cytec's 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cytec Cytec's 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.
High dependence on third party suppliers
– Cytec Cytec's 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Cytec Industries' Spin-Off (A): Sink or Swim?, Cytec Cytec's 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 .
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. Cytec Cytec's will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Shortening product life cycle
– it is one of the major threat that Cytec Cytec's is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Cytec Cytec's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Cytec Cytec's.
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. Cytec Cytec's needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Regulatory challenges
– Cytec Cytec's 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.
Weighted SWOT Analysis of Cytec Industries' Spin-Off (A): Sink or Swim? 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 Cytec Industries' Spin-Off (A): Sink or Swim? 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 Cytec Industries' Spin-Off (A): Sink or Swim? 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 Cytec Industries' Spin-Off (A): Sink or Swim? 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 Cytec Industries' Spin-Off (A): Sink or Swim? 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 Cytec Cytec's needs to make to build a sustainable competitive advantage.