Case Study Description of Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets
Sembcorp Industries, a Singapore conglomerate with assets of over S$22 billion, was undergoing a change in leadership. Tang Kin Fei retired as group president and CEO in April 2017 after 30 years with the company. Overseas operations accounted for 63% of their Utilities business' net profit, which formed the bulk of group earnings in 2016. Sembcorp's global power portfolio had doubled in the last five years. Rapidly developing economies, hungry for energy to fuel growth and urbanisation, were their key targets. There were growing concerns on the execution risks of developing a project pipeline in these markets and the environmental, social and governance (ESG) challenges involved. Sustaining their growth path might not simply be a matter of building on past success and replicating their business model overseas. How would they manage the inherent risks and complexities of the emerging markets, namely India, Bangladesh, Myanmar and China, albeit ripe with opportunities?
Swot Analysis of "Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets" written by Yvonne Chong, A. Lee Gilbert includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sembcorp Utilities facing as an external strategic factors. Some of the topics covered in Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets case study are - Strategic Management Strategies, Emerging markets, Government, Sustainability and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets casestudy better are - – increasing transportation and logistics costs, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices,
talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sembcorp Utilities, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sembcorp Utilities 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 Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets can be done for the following purposes –
1. Strategic planning using facts provided in Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets case study
2. Improving business portfolio management of Sembcorp Utilities
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 Sembcorp Utilities
Strengths Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sembcorp Utilities in Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Sembcorp Utilities in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Sembcorp Utilities 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.
Effective Research and Development (R&D)
– Sembcorp Utilities 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 Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Sembcorp Utilities has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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.
Successful track record of launching new products
– Sembcorp Utilities has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sembcorp Utilities has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Diverse revenue streams
– Sembcorp Utilities is present in almost all the verticals within the industry. This has provided firm in Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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.
Highly skilled collaborators
– Sembcorp Utilities 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 Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Sembcorp Utilities in the sector have low bargaining power. Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sembcorp Utilities to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Strategy & Execution industry
– Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets firm has clearly differentiated products in the market place. This has enabled Sembcorp Utilities to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Sembcorp Utilities to invest into research and development (R&D) and innovation.
Strong track record of project management
– Sembcorp Utilities is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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 Sembcorp Utilities 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.
Weaknesses Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets are -
High operating costs
– Compare to the competitors, firm in the HBR case study Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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 Sembcorp Utilities 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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 Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets can leverage the sales team experience to cultivate customer relationships as Sembcorp Utilities is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Yvonne Chong, A. Lee Gilbert suggests that, Sembcorp Utilities 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets, is just above the industry average. Sembcorp Utilities 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.
Products dominated business model
– Even though Sembcorp Utilities 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 - Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets HBR case study mentions - Sembcorp Utilities 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets, it seems that the employees of Sembcorp Utilities 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.
No frontier risks strategy
– After analyzing the HBR case study Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets, 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets, in the dynamic environment Sembcorp Utilities has struggled to respond to the nimble upstart competition. Sembcorp Utilities has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Sembcorp Utilities 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.
Low market penetration in new markets
– Outside its home market of Sembcorp Utilities, firm in the HBR case study Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets | 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 Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets are -
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Sembcorp Utilities to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Loyalty marketing
– Sembcorp Utilities 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sembcorp Utilities 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, Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Sembcorp Utilities can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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, Sembcorp Utilities can use these opportunities to build new business models that can help the communities that Sembcorp Utilities operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Sembcorp Utilities 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sembcorp Utilities 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.
Learning at scale
– Online learning technologies has now opened space for Sembcorp Utilities to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Using analytics as competitive advantage
– Sembcorp Utilities 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 Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sembcorp Utilities to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Sembcorp Utilities 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sembcorp Utilities 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.
Creating value in data economy
– The success of analytics program of Sembcorp Utilities has opened avenues for new revenue streams for the organization in the industry. This can help Sembcorp Utilities to build a more holistic ecosystem as suggested in the Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets case study. Sembcorp Utilities can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sembcorp Utilities 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 Sembcorp Utilities to hire the very best people irrespective of their geographical location.
Threats Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets are -
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. Sembcorp Utilities 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sembcorp Utilities with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets, Sembcorp Utilities 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 .
Regulatory challenges
– Sembcorp Utilities 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 wage structure of Sembcorp Utilities
– 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 Sembcorp Utilities.
Environmental challenges
– Sembcorp Utilities 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. Sembcorp Utilities can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
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. Sembcorp Utilities needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Sembcorp Utilities 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. Sembcorp Utilities can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Sembcorp Utilities 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sembcorp Utilities 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 Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sembcorp Utilities 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.
Weighted SWOT Analysis of Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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 Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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 Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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 Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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 Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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 Sembcorp Utilities needs to make to build a sustainable competitive advantage.
