Arcor: Global Strategy and Local Turbulence (Abridged) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Arcor: Global Strategy and Local Turbulence (Abridged)
Argentine confectionery manufacturer, Arcor Group, seeks to implement an international strategy but in 2003, while recovering from the Argentine financial crisis, globalization plans are thwarted. Already Latin America's leading candy producer and an exporter to over 100 countries, Arcor analyzes how it can become truly global with production facilities and distribution networks in various regions, such as North America, Europe, and Asia. First, however, Arcor must stabilize its operations at home, where a devalued peso, economic uncertainty, and political instability still linger from the devastating financial crisis.
Authors :: Pankaj Ghemawat, Michael G. Rukstad, Jennifer L. Illes
Swot Analysis of "Arcor: Global Strategy and Local Turbulence (Abridged)" written by Pankaj Ghemawat, Michael G. Rukstad, Jennifer L. Illes includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Arcor Argentine facing as an external strategic factors. Some of the topics covered in Arcor: Global Strategy and Local Turbulence (Abridged) case study are - Strategic Management Strategies, Globalization, Operations management, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Arcor: Global Strategy and Local Turbulence (Abridged) casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies,
increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Arcor: Global Strategy and Local Turbulence (Abridged)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Arcor: Global Strategy and Local Turbulence (Abridged) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Arcor Argentine, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Arcor Argentine 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 Arcor: Global Strategy and Local Turbulence (Abridged) can be done for the following purposes –
1. Strategic planning using facts provided in Arcor: Global Strategy and Local Turbulence (Abridged) case study
2. Improving business portfolio management of Arcor Argentine
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 Arcor Argentine
Strengths Arcor: Global Strategy and Local Turbulence (Abridged) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Arcor Argentine in Arcor: Global Strategy and Local Turbulence (Abridged) Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Arcor: Global Strategy and Local Turbulence (Abridged) 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.
Strong track record of project management
– Arcor Argentine 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
– Arcor Argentine has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Arcor Argentine 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.
Organizational Resilience of Arcor Argentine
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Arcor Argentine does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Arcor Argentine in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Strategy & Execution field
– Arcor Argentine 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 Arcor Argentine in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Strategy & Execution industry
– Arcor: Global Strategy and Local Turbulence (Abridged) firm has clearly differentiated products in the market place. This has enabled Arcor Argentine to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Arcor Argentine to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Arcor Argentine is present in almost all the verticals within the industry. This has provided firm in Arcor: Global Strategy and Local Turbulence (Abridged) 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.
Low bargaining power of suppliers
– Suppliers of Arcor Argentine in the sector have low bargaining power. Arcor: Global Strategy and Local Turbulence (Abridged) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Arcor Argentine to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Arcor Argentine 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 Arcor: Global Strategy and Local Turbulence (Abridged) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Arcor Argentine 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.
High brand equity
– Arcor Argentine has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Arcor Argentine to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Arcor: Global Strategy and Local Turbulence (Abridged) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Arcor: Global Strategy and Local Turbulence (Abridged) are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor Argentine has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Arcor Argentine 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. Arcor Argentine 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.
Lack of clear differentiation of Arcor Argentine products
– To increase the profitability and margins on the products, Arcor Argentine needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Arcor: Global Strategy and Local Turbulence (Abridged) HBR case study mentions - Arcor Argentine 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Arcor Argentine is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Arcor: Global Strategy and Local Turbulence (Abridged) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Arcor: Global Strategy and Local Turbulence (Abridged), in the dynamic environment Arcor Argentine has struggled to respond to the nimble upstart competition. Arcor Argentine has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– Arcor Argentine 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Arcor: Global Strategy and Local Turbulence (Abridged), is just above the industry average. Arcor Argentine 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.
Interest costs
– Compare to the competition, Arcor Argentine 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.
No frontier risks strategy
– After analyzing the HBR case study Arcor: Global Strategy and Local Turbulence (Abridged), 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.
Aligning sales with marketing
– It come across in the case study Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor: Global Strategy and Local Turbulence (Abridged) can leverage the sales team experience to cultivate customer relationships as Arcor Argentine is planning to shift buying processes online.
Opportunities Arcor: Global Strategy and Local Turbulence (Abridged) | 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 Arcor: Global Strategy and Local Turbulence (Abridged) are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Arcor Argentine 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.
Building a culture of innovation
– managers at Arcor Argentine 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.
Buying journey improvements
– Arcor Argentine can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor Argentine in the consumer business. Now Arcor Argentine can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Arcor Argentine can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Arcor Argentine 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.
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. Arcor Argentine can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Arcor Argentine 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 Arcor: Global Strategy and Local Turbulence (Abridged) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Arcor Argentine to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Arcor Argentine is facing challenges because of the dominance of functional experts in the organization. Arcor: Global Strategy and Local Turbulence (Abridged) 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.
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 Arcor Argentine 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.
Better consumer reach
– The expansion of the 5G network will help Arcor Argentine to increase its market reach. Arcor Argentine 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.
Creating value in data economy
– The success of analytics program of Arcor Argentine has opened avenues for new revenue streams for the organization in the industry. This can help Arcor Argentine to build a more holistic ecosystem as suggested in the Arcor: Global Strategy and Local Turbulence (Abridged) case study. Arcor Argentine can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Arcor Argentine 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. Arcor Argentine 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.
Threats Arcor: Global Strategy and Local Turbulence (Abridged) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Arcor: Global Strategy and Local Turbulence (Abridged) are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Arcor Argentine with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Arcor Argentine 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 Arcor: Global Strategy and Local Turbulence (Abridged) .
Regulatory challenges
– Arcor Argentine 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 Arcor Argentine
– 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 Arcor Argentine.
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 Arcor Argentine in the Strategy & Execution sector and impact the bottomline of the organization.
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. Arcor Argentine can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Arcor: Global Strategy and Local Turbulence (Abridged), Arcor Argentine 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 .
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Arcor Argentine 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 dependence on third party suppliers
– Arcor Argentine 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
– Arcor Argentine has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Arcor Argentine 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.
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 Arcor Argentine.
Environmental challenges
– Arcor Argentine 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. Arcor Argentine can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Weighted SWOT Analysis of Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor Argentine needs to make to build a sustainable competitive advantage.
