Operational Sustainability: From Vision to Strategy at Henkel SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Operational Sustainability: From Vision to Strategy at Henkel
In 2011, Henkel launched its latest sustainability strategy, Factor 3. It links sustainability to sales performance and resource efficiency. The case presents the evolution of Henkel's approach to sustainability over a 50-year period and the challenges faced by Charlotte Kuszewsky, a line manager who must balance the sustainability targets with an increasingly difficult business situation, due to the financial crisis in Europe.
Swot Analysis of "Operational Sustainability: From Vision to Strategy at Henkel" written by Mike Rosenberg, Victoria C Moreno includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sustainability Henkel facing as an external strategic factors. Some of the topics covered in Operational Sustainability: From Vision to Strategy at Henkel case study are - Strategic Management Strategies, Sustainability and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Operational Sustainability: From Vision to Strategy at Henkel casestudy better are - – increasing transportation and logistics costs, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, technology disruption, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies,
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 Operational Sustainability: From Vision to Strategy at Henkel
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Operational Sustainability: From Vision to Strategy at Henkel case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sustainability Henkel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sustainability Henkel 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 Operational Sustainability: From Vision to Strategy at Henkel can be done for the following purposes –
1. Strategic planning using facts provided in Operational Sustainability: From Vision to Strategy at Henkel case study
2. Improving business portfolio management of Sustainability Henkel
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 Sustainability Henkel
Strengths Operational Sustainability: From Vision to Strategy at Henkel | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sustainability Henkel in Operational Sustainability: From Vision to Strategy at Henkel Harvard Business Review case study are -
High brand equity
– Sustainability Henkel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sustainability Henkel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Sustainability Henkel 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.
Operational resilience
– The operational resilience strategy in the Operational Sustainability: From Vision to Strategy at Henkel 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.
Training and development
– Sustainability Henkel has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Operational Sustainability: From Vision to Strategy at Henkel 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.
Ability to recruit top talent
– Sustainability Henkel is one of the leading recruiters in the industry. Managers in the Operational Sustainability: From Vision to Strategy at Henkel are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Sustainability Henkel 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 Mike Rosenberg, Victoria C Moreno 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.
Innovation driven organization
– Sustainability Henkel is one of the most innovative firm in sector. Manager in Operational Sustainability: From Vision to Strategy at Henkel Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Sustainability Henkel 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 Sustainability Henkel is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Operational Sustainability: From Vision to Strategy at Henkel Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Sustainability Henkel is present in almost all the verticals within the industry. This has provided firm in Operational Sustainability: From Vision to Strategy at Henkel 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.
Successful track record of launching new products
– Sustainability Henkel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sustainability Henkel 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
– Sustainability Henkel 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 Operational Sustainability: From Vision to Strategy at Henkel HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Sustainability Henkel in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Operational Sustainability: From Vision to Strategy at Henkel | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Operational Sustainability: From Vision to Strategy at Henkel are -
Workers concerns about automation
– As automation is fast increasing in the segment, Sustainability Henkel 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.
Capital Spending Reduction
– Even during the low interest decade, Sustainability Henkel 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.
Increasing silos among functional specialists
– The organizational structure of Sustainability Henkel is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Sustainability Henkel needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sustainability Henkel to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Operational Sustainability: From Vision to Strategy at Henkel, in the dynamic environment Sustainability Henkel has struggled to respond to the nimble upstart competition. Sustainability Henkel has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Sustainability Henkel supply chain. Even after few cautionary changes mentioned in the HBR case study - Operational Sustainability: From Vision to Strategy at Henkel, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sustainability Henkel vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Sustainability Henkel 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Operational Sustainability: From Vision to Strategy at Henkel 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 Sustainability Henkel has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Sustainability Henkel 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 bargaining power of channel partners
– Because of the regulatory requirements, Mike Rosenberg, Victoria C Moreno suggests that, Sustainability Henkel is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High cash cycle compare to competitors
Sustainability Henkel has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Low market penetration in new markets
– Outside its home market of Sustainability Henkel, firm in the HBR case study Operational Sustainability: From Vision to Strategy at Henkel needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Operational Sustainability: From Vision to Strategy at Henkel | 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 Operational Sustainability: From Vision to Strategy at Henkel are -
Learning at scale
– Online learning technologies has now opened space for Sustainability Henkel 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.
Leveraging digital technologies
– Sustainability Henkel 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.
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 Sustainability Henkel in the consumer business. Now Sustainability Henkel can target international markets with far fewer capital restrictions requirements than the existing system.
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. Sustainability Henkel can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sustainability Henkel 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. Sustainability Henkel 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sustainability Henkel 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, Operational Sustainability: From Vision to Strategy at Henkel, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Sustainability Henkel 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 Sustainability Henkel 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sustainability Henkel can use these opportunities to build new business models that can help the communities that Sustainability Henkel operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Using analytics as competitive advantage
– Sustainability Henkel 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 Operational Sustainability: From Vision to Strategy at Henkel - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sustainability Henkel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Sustainability Henkel can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Sustainability Henkel 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sustainability Henkel is facing challenges because of the dominance of functional experts in the organization. Operational Sustainability: From Vision to Strategy at Henkel 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.
Threats Operational Sustainability: From Vision to Strategy at Henkel External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Operational Sustainability: From Vision to Strategy at Henkel are -
Increasing wage structure of Sustainability Henkel
– 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 Sustainability Henkel.
Stagnating economy with rate increase
– Sustainability Henkel 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.
Environmental challenges
– Sustainability Henkel 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. Sustainability Henkel can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Technology acceleration in Forth Industrial Revolution
– Sustainability Henkel has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Sustainability Henkel 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.
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 dependence on third party suppliers
– Sustainability Henkel 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.
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. Sustainability Henkel 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sustainability Henkel 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 Operational Sustainability: From Vision to Strategy at Henkel .
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 Sustainability Henkel business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Sustainability Henkel 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 Sustainability Henkel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Sustainability Henkel is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Operational Sustainability: From Vision to Strategy at Henkel, Sustainability Henkel 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 .
Weighted SWOT Analysis of Operational Sustainability: From Vision to Strategy at Henkel 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 Operational Sustainability: From Vision to Strategy at Henkel 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 Operational Sustainability: From Vision to Strategy at Henkel 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 Operational Sustainability: From Vision to Strategy at Henkel 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 Operational Sustainability: From Vision to Strategy at Henkel 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 Sustainability Henkel needs to make to build a sustainable competitive advantage.