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 government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, geopolitical disruptions, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, wage bills are increasing, there is backlash against globalization,
banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, 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 -
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.
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.
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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Sembcorp Utilities digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sembcorp Utilities 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.
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.
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.
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.
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.
Organizational Resilience of Sembcorp Utilities
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sembcorp Utilities does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Sembcorp Utilities is one of the most innovative firm in sector. Manager in Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Sembcorp Utilities is one of the leading recruiters in the industry. Managers in the Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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 -
Slow decision making process
– As mentioned earlier in the report, Sembcorp Utilities 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. Sembcorp Utilities 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.
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.
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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Sembcorp Utilities 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.
Increasing silos among functional specialists
– The organizational structure of Sembcorp Utilities is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Sembcorp Utilities needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sembcorp Utilities to focus more on services rather than just following the product oriented approach.
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.
Skills based hiring
– The stress on hiring functional specialists at Sembcorp Utilities has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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 Sembcorp Utilities supply chain. Even after few cautionary changes mentioned in the HBR case study - Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sembcorp Utilities vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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 Sembcorp Utilities has relatively successful track record of launching new products.
Need for greater diversity
– Sembcorp Utilities 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 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 -
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 Sembcorp Utilities in the consumer business. Now Sembcorp Utilities can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sembcorp Utilities is facing challenges because of the dominance of functional experts in the organization. Sembcorp Utilities: Powering Sustainable Growth in Emerging Markets 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.
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. Sembcorp Utilities can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Sembcorp Utilities has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Sembcorp Utilities 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.
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.
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.
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.
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.
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.
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.
High dependence on third party suppliers
– Sembcorp Utilities 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 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 .
Stagnating economy with rate increase
– Sembcorp Utilities 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.
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 .
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.