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 - – cloud computing is disrupting traditional business models, wage bills are increasing, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings,
increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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 -
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.
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 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.
Sustainable margins compare to other players in Strategy & Execution industry
– The Luksic Group: A Chilean Conglomerate in a Global Economy firm has clearly differentiated products in the market place. This has enabled Enco Luksic to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Enco Luksic to invest into research and development (R&D) and innovation.
Innovation driven organization
– Enco Luksic is one of the most innovative firm in sector. Manager in The Luksic Group: A Chilean Conglomerate in a Global Economy 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 The Luksic Group: A Chilean Conglomerate in a Global Economy 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Enco Luksic digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Enco Luksic has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Analytics focus
– 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.
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.
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 recruit top talent
– Enco Luksic is one of the leading recruiters in the industry. Managers in the The Luksic Group: A Chilean Conglomerate in a Global Economy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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 -
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.
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.
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.
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 dependence on star products
– The top 2 products and services of the firm as mentioned in the The Luksic Group: A Chilean Conglomerate in a Global Economy 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 Enco Luksic has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Enco Luksic 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 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.
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 Enco Luksic supply chain. Even after few cautionary changes mentioned in the HBR case study - The Luksic Group: A Chilean Conglomerate in a Global Economy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Enco Luksic vulnerable to further global disruptions in South East Asia.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Luksic Group: A Chilean Conglomerate in a Global Economy, it seems that the employees of Enco Luksic 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.
Increasing silos among functional specialists
– The organizational structure of Enco Luksic is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Enco Luksic needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Enco Luksic to focus more on services rather than just following the product oriented approach.
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 -
Low interest rates
– Even though inflation is raising its head in most developed economies, Enco Luksic 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.
Using analytics as competitive advantage
– Enco Luksic 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 The Luksic Group: A Chilean Conglomerate in a Global Economy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Enco Luksic to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
Leveraging digital technologies
– Enco Luksic 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.
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. Enco Luksic can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
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.
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.
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.
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.
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 -
Technology acceleration in Forth Industrial Revolution
– Enco Luksic has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Enco Luksic 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.
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.
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 Enco Luksic in the Strategy & Execution sector and impact the bottomline of the organization.
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.
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.
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 Enco Luksic business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.
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.
High dependence on third party suppliers
– Enco Luksic 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.
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.
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.
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.
