Case Study Description of Corporate Strategy at Berkshire Partners
The managing directors of Berkshire Partners, a mid-sized private equity firm, address strategic and organizational challenges in response to turbulent market conditions, rapid firm growth, and the transition of leadership from its founding partners to the next generations. To address some of these dynamics, and to protect Berkshire's corporate advantage, the managing directors established three executive oversight committees, developed new specialized corporate functions, and incubated an internal hedge fund group. Students are given the opportunity to assess Berkshire's recent changes in corporate strategy and organizational design and to formulate recommendations going forward.
Swot Analysis of "Corporate Strategy at Berkshire Partners" written by Julie M. Wulf, Scott Waggoner includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Berkshire's Berkshire facing as an external strategic factors. Some of the topics covered in Corporate Strategy at Berkshire Partners case study are - Strategic Management Strategies, Entrepreneurial finance, Government, Leading teams, Organizational structure, Reorganization and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Corporate Strategy at Berkshire Partners casestudy better are - – technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy,
there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Corporate Strategy at Berkshire Partners
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Corporate Strategy at Berkshire Partners case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Berkshire's Berkshire, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Berkshire's Berkshire 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 Corporate Strategy at Berkshire Partners can be done for the following purposes –
1. Strategic planning using facts provided in Corporate Strategy at Berkshire Partners case study
2. Improving business portfolio management of Berkshire's Berkshire
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 Berkshire's Berkshire
Strengths Corporate Strategy at Berkshire Partners | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Berkshire's Berkshire in Corporate Strategy at Berkshire Partners Harvard Business Review case study are -
Analytics focus
– Berkshire's Berkshire 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 Julie M. Wulf, Scott Waggoner 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.
Superior customer experience
– The customer experience strategy of Berkshire's Berkshire in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Berkshire's Berkshire is one of the leading recruiters in the industry. Managers in the Corporate Strategy at Berkshire Partners are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Berkshire's Berkshire is one of the most innovative firm in sector. Manager in Corporate Strategy at Berkshire Partners Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Strategy & Execution industry
– Corporate Strategy at Berkshire Partners firm has clearly differentiated products in the market place. This has enabled Berkshire's Berkshire to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Berkshire's Berkshire to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Corporate Strategy at Berkshire Partners 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.
Effective Research and Development (R&D)
– Berkshire's Berkshire 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 Corporate Strategy at Berkshire Partners - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Berkshire's Berkshire 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 Berkshire's Berkshire is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Corporate Strategy at Berkshire Partners Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Berkshire's Berkshire 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
– Berkshire's Berkshire 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 Corporate Strategy at Berkshire Partners HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Berkshire's Berkshire digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Berkshire's Berkshire 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.
Ability to lead change in Strategy & Execution field
– Berkshire's Berkshire is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Berkshire's Berkshire in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Corporate Strategy at Berkshire Partners | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Corporate Strategy at Berkshire Partners are -
Products dominated business model
– Even though Berkshire's Berkshire has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Corporate Strategy at Berkshire Partners should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Berkshire's Berkshire 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. Berkshire's Berkshire 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.
High cash cycle compare to competitors
Berkshire's Berkshire 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Corporate Strategy at Berkshire Partners 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 Berkshire's Berkshire 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Corporate Strategy at Berkshire Partners, it seems that the employees of Berkshire's Berkshire 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 Corporate Strategy at Berkshire Partners, is just above the industry average. Berkshire's Berkshire 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.
Aligning sales with marketing
– It come across in the case study Corporate Strategy at Berkshire Partners 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 Corporate Strategy at Berkshire Partners can leverage the sales team experience to cultivate customer relationships as Berkshire's Berkshire is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Julie M. Wulf, Scott Waggoner suggests that, Berkshire's Berkshire 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Berkshire's Berkshire 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.
Need for greater diversity
– Berkshire's Berkshire 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.
Skills based hiring
– The stress on hiring functional specialists at Berkshire's Berkshire 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.
Opportunities Corporate Strategy at Berkshire Partners | 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 Corporate Strategy at Berkshire Partners are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Berkshire's Berkshire in the consumer business. Now Berkshire's Berkshire can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Berkshire's Berkshire 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 Corporate Strategy at Berkshire Partners - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Berkshire's Berkshire to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Berkshire's Berkshire 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. Berkshire's Berkshire 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.
Better consumer reach
– The expansion of the 5G network will help Berkshire's Berkshire to increase its market reach. Berkshire's Berkshire 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.
Buying journey improvements
– Berkshire's Berkshire can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Corporate Strategy at Berkshire Partners 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Berkshire's Berkshire 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Berkshire's Berkshire 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.
Loyalty marketing
– Berkshire's Berkshire 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.
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. Berkshire's Berkshire can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Berkshire's Berkshire can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Berkshire's Berkshire is facing challenges because of the dominance of functional experts in the organization. Corporate Strategy at Berkshire Partners 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.
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. Berkshire's Berkshire 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, Berkshire's Berkshire can use these opportunities to build new business models that can help the communities that Berkshire's Berkshire operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats Corporate Strategy at Berkshire Partners External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Corporate Strategy at Berkshire Partners are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Berkshire's Berkshire with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Berkshire's Berkshire business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Berkshire's Berkshire 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.
Environmental challenges
– Berkshire's Berkshire 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. Berkshire's Berkshire can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Berkshire's Berkshire 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.
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. Berkshire's Berkshire 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
– Berkshire's Berkshire 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.
Technology acceleration in Forth Industrial Revolution
– Berkshire's Berkshire has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Berkshire's Berkshire 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Berkshire's Berkshire 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 Corporate Strategy at Berkshire Partners .
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 Berkshire's Berkshire.
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.
Consumer confidence and its impact on Berkshire's Berkshire 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 wage structure of Berkshire's Berkshire
– 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 Berkshire's Berkshire.
Weighted SWOT Analysis of Corporate Strategy at Berkshire Partners 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 Corporate Strategy at Berkshire Partners 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 Corporate Strategy at Berkshire Partners 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 Corporate Strategy at Berkshire Partners 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 Corporate Strategy at Berkshire Partners 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 Berkshire's Berkshire needs to make to build a sustainable competitive advantage.