Swot Analysis of "HeidelbergCement: The Baltic Kiln Decision" written by David Drake, Paul Kleindorfer, Luk N. Van Wassenhove includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Heidelbergcement Kiln facing as an external strategic factors. Some of the topics covered in HeidelbergCement: The Baltic Kiln Decision case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the HeidelbergCement: The Baltic Kiln Decision casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions,
central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of HeidelbergCement: The Baltic Kiln Decision
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in HeidelbergCement: The Baltic Kiln Decision case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Heidelbergcement Kiln, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Heidelbergcement Kiln 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 HeidelbergCement: The Baltic Kiln Decision can be done for the following purposes –
1. Strategic planning using facts provided in HeidelbergCement: The Baltic Kiln Decision case study
2. Improving business portfolio management of Heidelbergcement Kiln
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 Heidelbergcement Kiln
Strengths HeidelbergCement: The Baltic Kiln Decision | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Heidelbergcement Kiln in HeidelbergCement: The Baltic Kiln Decision Harvard Business Review case study are -
Diverse revenue streams
– Heidelbergcement Kiln is present in almost all the verticals within the industry. This has provided firm in HeidelbergCement: The Baltic Kiln 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.
High switching costs
– The high switching costs that Heidelbergcement Kiln 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.
Successful track record of launching new products
– Heidelbergcement Kiln has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Heidelbergcement Kiln 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.
High brand equity
– Heidelbergcement Kiln has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Heidelbergcement Kiln to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Heidelbergcement Kiln
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Heidelbergcement Kiln does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the HeidelbergCement: The Baltic Kiln 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Heidelbergcement Kiln digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Heidelbergcement Kiln 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.
Learning organization
- Heidelbergcement Kiln 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 Heidelbergcement Kiln is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in HeidelbergCement: The Baltic Kiln Decision Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Heidelbergcement Kiln 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 David Drake, Paul Kleindorfer, Luk N. Van Wassenhove 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.
Cross disciplinary teams
– Horizontal connected teams at the Heidelbergcement Kiln 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.
Sustainable margins compare to other players in Strategy & Execution industry
– HeidelbergCement: The Baltic Kiln Decision firm has clearly differentiated products in the market place. This has enabled Heidelbergcement Kiln to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Heidelbergcement Kiln to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Heidelbergcement Kiln in the sector have low bargaining power. HeidelbergCement: The Baltic Kiln Decision has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Heidelbergcement Kiln to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses HeidelbergCement: The Baltic Kiln Decision | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of HeidelbergCement: The Baltic Kiln Decision are -
Need for greater diversity
– Heidelbergcement Kiln 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Heidelbergcement Kiln 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.
Aligning sales with marketing
– It come across in the case study HeidelbergCement: The Baltic Kiln Decision 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 HeidelbergCement: The Baltic Kiln Decision can leverage the sales team experience to cultivate customer relationships as Heidelbergcement Kiln is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Heidelbergcement Kiln 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study HeidelbergCement: The Baltic Kiln Decision, it seems that the employees of Heidelbergcement Kiln 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.
Slow to strategic competitive environment developments
– As HeidelbergCement: The Baltic Kiln Decision HBR case study mentions - Heidelbergcement Kiln takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Heidelbergcement Kiln 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. Heidelbergcement Kiln 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study HeidelbergCement: The Baltic Kiln Decision, is just above the industry average. Heidelbergcement Kiln 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study HeidelbergCement: The Baltic Kiln Decision, in the dynamic environment Heidelbergcement Kiln has struggled to respond to the nimble upstart competition. Heidelbergcement Kiln has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study HeidelbergCement: The Baltic Kiln 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 Heidelbergcement Kiln 's lucrative customers.
High cash cycle compare to competitors
Heidelbergcement Kiln 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.
Opportunities HeidelbergCement: The Baltic Kiln 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 HeidelbergCement: The Baltic Kiln Decision are -
Building a culture of innovation
– managers at Heidelbergcement Kiln 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 Heidelbergcement Kiln to increase its market reach. Heidelbergcement Kiln 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Heidelbergcement Kiln can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Heidelbergcement Kiln 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 Heidelbergcement Kiln to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Heidelbergcement Kiln is facing challenges because of the dominance of functional experts in the organization. HeidelbergCement: The Baltic Kiln Decision 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.
Buying journey improvements
– Heidelbergcement Kiln can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. HeidelbergCement: The Baltic Kiln Decision 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.
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 Heidelbergcement Kiln in the consumer business. Now Heidelbergcement Kiln can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Heidelbergcement Kiln 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, HeidelbergCement: The Baltic Kiln 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.
Learning at scale
– Online learning technologies has now opened space for Heidelbergcement Kiln 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Heidelbergcement Kiln 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.
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. Heidelbergcement Kiln can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Heidelbergcement Kiln 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 HeidelbergCement: The Baltic Kiln Decision - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Heidelbergcement Kiln to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Heidelbergcement Kiln 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.
Threats HeidelbergCement: The Baltic Kiln Decision External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study HeidelbergCement: The Baltic Kiln Decision are -
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 Heidelbergcement Kiln.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Heidelbergcement Kiln 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 HeidelbergCement: The Baltic Kiln Decision .
Consumer confidence and its impact on Heidelbergcement Kiln 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.
Shortening product life cycle
– it is one of the major threat that Heidelbergcement Kiln 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 HeidelbergCement: The Baltic Kiln Decision, Heidelbergcement Kiln 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 .
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 Heidelbergcement Kiln business can come under increasing regulations regarding data privacy, data security, etc.
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 dependence on third party suppliers
– Heidelbergcement Kiln 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 Heidelbergcement Kiln in the Strategy & Execution sector and impact the bottomline of the organization.
Regulatory challenges
– Heidelbergcement Kiln 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 Heidelbergcement Kiln
– 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 Heidelbergcement Kiln.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Heidelbergcement Kiln 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 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. Heidelbergcement Kiln needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Weighted SWOT Analysis of HeidelbergCement: The Baltic Kiln 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 HeidelbergCement: The Baltic Kiln 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 HeidelbergCement: The Baltic Kiln 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 HeidelbergCement: The Baltic Kiln 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 HeidelbergCement: The Baltic Kiln 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 Heidelbergcement Kiln needs to make to build a sustainable competitive advantage.