Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision.
In 1998, the United States Environmental Protection Agency (EPA) and US manufacturers of heavy-duty diesel engines signed a consent decree which included among other things, pulling forward ("pull ahead") by 15 months a new nitrogen oxide (NOx) emission standard. By early 2002, Caterpillar and Detroit Diesel were requesting EPA to delay the "pull ahead". Cummins was being pressured by its competitors to join in this request. On the other side, the Environmental Protection Agency (EPA) and several environmental organizations wanted Cummins to adhere to the requirements of the consent decree. Cummins was navigating through a very difficult economic time and could not afford to make a mistake. Joe Loughrey, Cummins Engine Business President and his team needed to make a strategic decision. Would they a) agree with the competitors' position asking EPA to delay the consent decree which required the company to pull ahead an expensive environment requirement, thus allowing manufacturers to continue using the established engine technology that had customer support, or b) accept the terms of the consent decree and continue to develop a new engine technology against the wishes of many in the industry and thus face possible market retraction. Both strategic decision options had substantial consequences and needed to be carefully evaluated. Not only was the future of Cummins Engine Business in jeopardy, but as we learn later, this decision impacted the future of the whole industry.
Swot Analysis of "Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision." written by Erica Berte, Christine Vujovich includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cummins Decree facing as an external strategic factors. Some of the topics covered in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. case study are - Strategic Management Strategies, Competitive strategy, Corporate governance, Organizational culture, Social responsibility and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. casestudy better are - – increasing energy prices, increasing commodity prices, there is backlash against globalization, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%,
digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cummins Decree, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cummins Decree 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. can be done for the following purposes –
1. Strategic planning using facts provided in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. case study
2. Improving business portfolio management of Cummins Decree
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 Cummins Decree
Strengths Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cummins Decree in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. Harvard Business Review case study are -
Training and development
– Cummins Decree has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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.
Innovation driven organization
– Cummins Decree is one of the most innovative firm in sector. Manager in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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.
Cross disciplinary teams
– Horizontal connected teams at the Cummins Decree 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Cummins Decree digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cummins Decree 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.
Effective Research and Development (R&D)
– Cummins Decree 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Cummins Decree in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Cummins Decree is present in almost all the verticals within the industry. This has provided firm in Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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.
Strong track record of project management
– Cummins Decree is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Cummins Decree has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cummins Decree 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. firm has clearly differentiated products in the market place. This has enabled Cummins Decree to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Cummins Decree to invest into research and development (R&D) and innovation.
High brand equity
– Cummins Decree has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cummins Decree to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. are -
Low market penetration in new markets
– Outside its home market of Cummins Decree, firm in the HBR case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Cummins Decree 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision., in the dynamic environment Cummins Decree has struggled to respond to the nimble upstart competition. Cummins Decree has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Cummins Decree has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Cummins Decree is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cummins Decree needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cummins Decree to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Cummins Decree has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High operating costs
– Compare to the competitors, firm in the HBR case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Cummins Decree 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Cummins Decree 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.
Skills based hiring
– The stress on hiring functional specialists at Cummins Decree 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.
No frontier risks strategy
– After analyzing the HBR case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision., it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Need for greater diversity
– Cummins Decree 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. | 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. are -
Learning at scale
– Online learning technologies has now opened space for Cummins Decree 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.
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. Cummins Decree can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cummins Decree 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 Cummins Decree to hire the very best people irrespective of their geographical location.
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 Cummins Decree in the consumer business. Now Cummins Decree can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Cummins Decree 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.
Better consumer reach
– The expansion of the 5G network will help Cummins Decree to increase its market reach. Cummins Decree will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Loyalty marketing
– Cummins Decree 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, Cummins Decree 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, Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision., to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Cummins Decree 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cummins Decree to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Cummins Decree 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.
Leveraging digital technologies
– Cummins Decree 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cummins Decree 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.
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 Cummins Decree 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.
Threats Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. are -
Regulatory challenges
– Cummins Decree 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.
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 Cummins Decree 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cummins Decree 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 Cummins Decree business can come under increasing regulations regarding data privacy, data security, 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. Cummins Decree can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Cummins Decree 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.
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 Cummins Decree in the Strategy & Execution sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Cummins Decree is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Cummins Decree 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision., Cummins Decree 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 .
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 Cummins Decree.
Technology acceleration in Forth Industrial Revolution
– Cummins Decree has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cummins Decree 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.
Weighted SWOT Analysis of Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. 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 Cummins Decree needs to make to build a sustainable competitive advantage.
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