Tenaris: Creating a Global Leader from an Emerging Market SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Tenaris: Creating a Global Leader from an Emerging Market
In December 2003, Paolo Rocca, chairman and CEO of Tenaris S.A., could look back on a momentous first year for the company. Much had been accomplished since the formation of this leading global supplier of seamless steel pipe and related services in December 2002 via an exchange of the shares and American Depository Receipts of three separately listed pipe companies--Siderca in Argentina, Tamsa in Mexico, and Dalmine in Italy--for shares in the new company. The new company had eight manufacturing facilities variously located in South and North America, Europe, and Asia and distribution and sales centers present in over 20 countries. It enjoyed annual sales of $3.1 billion to the oil and gas, energy, and mechanical industries, a market-leading 19% share globally in seamless OCTG pipes (sold to the oil and gas industry), with particularly strong market shares in a number of national OCTG markets where it had local manufacturing. Despite these accomplishments, Tenaris faced challenges ahead as it sought to transform itself strategically and organizationally. Faced with a mature seamless steel pipe market, Rocca looked to further geographic expansion and a move into service provision to maintain growth and consolidate its market position. Both of these would require new skills and new ways of managing, especially on the human resources side. Building on the legal unification to transform Tenaris' 14,500 employees from eight heritage companies into one centrally aligned, unified operation was also proving to be a major managerial challenge as the company sought to realize the potential advantages of a sophisticated new organizational design. Further, the new organization needed to generate significant cost savings from the consolidation. What should Rocca expect from himself and his managers in the face of these changes? How would they need to manage differently in a unified global organization?
Swot Analysis of "Tenaris: Creating a Global Leader from an Emerging Market" written by John Roberts, Charlie Catalano includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tenaris Rocca facing as an external strategic factors. Some of the topics covered in Tenaris: Creating a Global Leader from an Emerging Market case study are - Strategic Management Strategies, Cross-cultural management, Globalization, Growth strategy, Organizational structure, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Tenaris: Creating a Global Leader from an Emerging Market casestudy better are - – increasing energy prices, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, increasing transportation and logistics costs, cloud computing is disrupting traditional business models,
increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Tenaris: Creating a Global Leader from an Emerging Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tenaris: Creating a Global Leader from an Emerging Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tenaris Rocca, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tenaris Rocca 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 Tenaris: Creating a Global Leader from an Emerging Market can be done for the following purposes –
1. Strategic planning using facts provided in Tenaris: Creating a Global Leader from an Emerging Market case study
2. Improving business portfolio management of Tenaris Rocca
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 Tenaris Rocca
Strengths Tenaris: Creating a Global Leader from an Emerging Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tenaris Rocca in Tenaris: Creating a Global Leader from an Emerging Market Harvard Business Review case study are -
Innovation driven organization
– Tenaris Rocca is one of the most innovative firm in sector. Manager in Tenaris: Creating a Global Leader from an Emerging Market Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Tenaris Rocca 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.
Diverse revenue streams
– Tenaris Rocca is present in almost all the verticals within the industry. This has provided firm in Tenaris: Creating a Global Leader from an Emerging Market 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.
Operational resilience
– The operational resilience strategy in the Tenaris: Creating a Global Leader from an Emerging Market 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.
Organizational Resilience of Tenaris Rocca
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tenaris Rocca does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Tenaris Rocca has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tenaris Rocca to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Tenaris Rocca has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tenaris Rocca 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.
Analytics focus
– Tenaris Rocca 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 John Roberts, Charlie Catalano 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.
Strong track record of project management
– Tenaris Rocca is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Tenaris Rocca 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 Tenaris: Creating a Global Leader from an Emerging Market HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Tenaris Rocca 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 Tenaris: Creating a Global Leader from an Emerging Market - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Tenaris Rocca in the sector have low bargaining power. Tenaris: Creating a Global Leader from an Emerging Market has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tenaris Rocca to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Tenaris: Creating a Global Leader from an Emerging Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tenaris: Creating a Global Leader from an Emerging Market are -
Low market penetration in new markets
– Outside its home market of Tenaris Rocca, firm in the HBR case study Tenaris: Creating a Global Leader from an Emerging Market needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Tenaris Rocca 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Tenaris: Creating a Global Leader from an Emerging Market, it seems that the employees of Tenaris Rocca 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Tenaris: Creating a Global Leader from an Emerging Market, is just above the industry average. Tenaris Rocca 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.
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 Tenaris Rocca supply chain. Even after few cautionary changes mentioned in the HBR case study - Tenaris: Creating a Global Leader from an Emerging Market, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tenaris Rocca vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Tenaris Rocca 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Tenaris: Creating a Global Leader from an Emerging Market, in the dynamic environment Tenaris Rocca has struggled to respond to the nimble upstart competition. Tenaris Rocca has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Tenaris Rocca is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Tenaris Rocca needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tenaris Rocca to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Tenaris Rocca 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. Tenaris Rocca 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.
Interest costs
– Compare to the competition, Tenaris Rocca 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tenaris Rocca is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Tenaris: Creating a Global Leader from an Emerging Market can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Tenaris: Creating a Global Leader from an Emerging Market | 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 Tenaris: Creating a Global Leader from an Emerging Market are -
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. Tenaris Rocca 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. Tenaris Rocca 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tenaris Rocca 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, Tenaris Rocca 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, Tenaris: Creating a Global Leader from an Emerging Market, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Tenaris Rocca can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tenaris Rocca can use these opportunities to build new business models that can help the communities that Tenaris Rocca operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tenaris Rocca 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 Tenaris Rocca to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Tenaris Rocca can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Better consumer reach
– The expansion of the 5G network will help Tenaris Rocca to increase its market reach. Tenaris Rocca 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.
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 Tenaris Rocca 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.
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. Tenaris Rocca can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Tenaris Rocca in the consumer business. Now Tenaris Rocca can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Tenaris Rocca 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tenaris Rocca is facing challenges because of the dominance of functional experts in the organization. Tenaris: Creating a Global Leader from an Emerging Market 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 Tenaris: Creating a Global Leader from an Emerging Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tenaris: Creating a Global Leader from an Emerging Market are -
Shortening product life cycle
– it is one of the major threat that Tenaris Rocca is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tenaris Rocca with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Tenaris Rocca
– 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 Tenaris Rocca.
Consumer confidence and its impact on Tenaris Rocca demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tenaris Rocca 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 Tenaris: Creating a Global Leader from an Emerging 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 Tenaris Rocca business can come under increasing regulations regarding data privacy, data security, etc.
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 Tenaris Rocca.
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 Tenaris Rocca in the Strategy & Execution sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Tenaris: Creating a Global Leader from an Emerging Market, Tenaris Rocca 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 .
High dependence on third party suppliers
– Tenaris Rocca 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.
Environmental challenges
– Tenaris Rocca 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. Tenaris Rocca can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Stagnating economy with rate increase
– Tenaris Rocca 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.
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. Tenaris Rocca 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.
Weighted SWOT Analysis of Tenaris: Creating a Global Leader from an Emerging Market 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 Tenaris: Creating a Global Leader from an Emerging Market 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 Tenaris: Creating a Global Leader from an Emerging Market 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 Tenaris: Creating a Global Leader from an Emerging Market 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 Tenaris: Creating a Global Leader from an Emerging Market 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 Tenaris Rocca needs to make to build a sustainable competitive advantage.
