The Luksic Group: A Chilean Conglomerate in a Global Economy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Luksic Group: A Chilean Conglomerate in a Global Economy
The case documents the strategic options open to QuiA?enco, the quoted holding company 82% owned by the Luksic family, in its ambition to become a major multilatina. Their successful strategy has been to acquire under-valued companies, enhance their assets and sell them for a gain. However, the stock price of QuiA?enco has languished since the initial IPO in July 1997.
Swot Analysis of "The Luksic Group: A Chilean Conglomerate in a Global Economy" written by Lourdes Casanova, Gonzalo Jimenez, Paulina Cuadra includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Enco Luksic facing as an external strategic factors. Some of the topics covered in The Luksic Group: A Chilean Conglomerate in a Global Economy case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the The Luksic Group: A Chilean Conglomerate in a Global Economy casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%,
increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of The Luksic Group: A Chilean Conglomerate in a Global Economy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Luksic Group: A Chilean Conglomerate in a Global Economy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Enco Luksic, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Enco Luksic 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 The Luksic Group: A Chilean Conglomerate in a Global Economy can be done for the following purposes –
1. Strategic planning using facts provided in The Luksic Group: A Chilean Conglomerate in a Global Economy case study
2. Improving business portfolio management of Enco Luksic
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 Enco Luksic
Strengths The Luksic Group: A Chilean Conglomerate in a Global Economy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Enco Luksic in The Luksic Group: A Chilean Conglomerate in a Global Economy Harvard Business Review case study are -
High brand equity
– Enco Luksic has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Enco Luksic to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Enco Luksic is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Enco Luksic is present in almost all the verticals within the industry. This has provided firm in The Luksic Group: A Chilean Conglomerate in a Global Economy 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.
Low bargaining power of suppliers
– Suppliers of Enco Luksic in the sector have low bargaining power. The Luksic Group: A Chilean Conglomerate in a Global Economy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Enco Luksic to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Enco Luksic 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 Enco Luksic is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Luksic Group: A Chilean Conglomerate in a Global Economy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Strategy & Execution field
– Enco Luksic 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 Enco Luksic in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Enco Luksic 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.
Analytics focus
– Enco Luksic 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 Lourdes Casanova, Gonzalo Jimenez, Paulina Cuadra 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.
Highly skilled collaborators
– Enco Luksic 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 The Luksic Group: A Chilean Conglomerate in a Global Economy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Enco Luksic 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.
Training and development
– Enco Luksic has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Luksic Group: A Chilean Conglomerate in a Global Economy 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.
Effective Research and Development (R&D)
– Enco Luksic 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 The Luksic Group: A Chilean Conglomerate in a Global Economy - 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 The Luksic Group: A Chilean Conglomerate in a Global Economy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Luksic Group: A Chilean Conglomerate in a Global Economy are -
Products dominated business model
– Even though Enco Luksic 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 - The Luksic Group: A Chilean Conglomerate in a Global Economy should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study The Luksic Group: A Chilean Conglomerate in a Global Economy 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 The Luksic Group: A Chilean Conglomerate in a Global Economy can leverage the sales team experience to cultivate customer relationships as Enco Luksic is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Luksic Group: A Chilean Conglomerate in a Global Economy, is just above the industry average. Enco Luksic 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Luksic Group: A Chilean Conglomerate in a Global Economy, in the dynamic environment Enco Luksic has struggled to respond to the nimble upstart competition. Enco Luksic has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As The Luksic Group: A Chilean Conglomerate in a Global Economy HBR case study mentions - Enco Luksic 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.
No frontier risks strategy
– After analyzing the HBR case study The Luksic Group: A Chilean Conglomerate in a Global Economy, 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.
Need for greater diversity
– Enco Luksic 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.
Low market penetration in new markets
– Outside its home market of Enco Luksic, firm in the HBR case study The Luksic Group: A Chilean Conglomerate in a Global Economy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Enco Luksic is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Luksic Group: A Chilean Conglomerate in a Global Economy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Enco Luksic has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Enco Luksic even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High bargaining power of channel partners
– Because of the regulatory requirements, Lourdes Casanova, Gonzalo Jimenez, Paulina Cuadra suggests that, Enco Luksic 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.
Opportunities The Luksic Group: A Chilean Conglomerate in a Global Economy | 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 The Luksic Group: A Chilean Conglomerate in a Global Economy are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Enco Luksic 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 Enco Luksic to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Enco Luksic 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Enco Luksic 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Enco Luksic can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Enco Luksic can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Luksic Group: A Chilean Conglomerate in a Global Economy 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Enco Luksic can use these opportunities to build new business models that can help the communities that Enco Luksic operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Creating value in data economy
– The success of analytics program of Enco Luksic has opened avenues for new revenue streams for the organization in the industry. This can help Enco Luksic to build a more holistic ecosystem as suggested in the The Luksic Group: A Chilean Conglomerate in a Global Economy case study. Enco Luksic can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Enco Luksic 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. Enco Luksic can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Enco Luksic 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.
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 Enco Luksic in the consumer business. Now Enco Luksic can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Enco Luksic is facing challenges because of the dominance of functional experts in the organization. The Luksic Group: A Chilean Conglomerate in a Global Economy 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.
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. Enco Luksic 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. Enco Luksic 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.
Threats The Luksic Group: A Chilean Conglomerate in a Global Economy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Luksic Group: A Chilean Conglomerate in a Global Economy are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Luksic Group: A Chilean Conglomerate in a Global Economy, Enco Luksic 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Enco Luksic 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.
Consumer confidence and its impact on Enco Luksic 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.
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. Enco Luksic will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Shortening product life cycle
– it is one of the major threat that Enco Luksic is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Enco Luksic 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.
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. Enco Luksic can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Enco Luksic needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Enco Luksic can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Enco Luksic.
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. Enco Luksic needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing wage structure of Enco Luksic
– 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 Enco Luksic.
Stagnating economy with rate increase
– Enco Luksic can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of The Luksic Group: A Chilean Conglomerate in a Global Economy 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 The Luksic Group: A Chilean Conglomerate in a Global Economy 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 The Luksic Group: A Chilean Conglomerate in a Global Economy 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 The Luksic Group: A Chilean Conglomerate in a Global Economy 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 The Luksic Group: A Chilean Conglomerate in a Global Economy 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 Enco Luksic needs to make to build a sustainable competitive advantage.