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 - – supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation,
competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, 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 -
Ability to recruit top talent
– Arcor Argentine is one of the leading recruiters in the industry. Managers in the Arcor: Global Strategy and Local Turbulence (Abridged) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Learning organization
- Arcor Argentine 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 Arcor Argentine is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Arcor: Global Strategy and Local Turbulence (Abridged) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Arcor Argentine 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.
Analytics focus
– Arcor Argentine 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 Pankaj Ghemawat, Michael G. Rukstad, Jennifer L. Illes 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.
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.
Effective Research and Development (R&D)
– Arcor Argentine 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 Arcor: Global Strategy and Local Turbulence (Abridged) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Arcor Argentine digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Arcor Argentine 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.
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 -
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.
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.
Low market penetration in new markets
– Outside its home market of Arcor Argentine, firm in the HBR case study Arcor: Global Strategy and Local Turbulence (Abridged) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Capital Spending Reduction
– Even during the low interest decade, Arcor Argentine 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.
Products dominated business model
– Even though Arcor Argentine 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 - Arcor: Global Strategy and Local Turbulence (Abridged) should strive to include more intangible value offerings along with its core products and services.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Arcor Argentine is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Arcor Argentine needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Arcor Argentine to focus more on services rather than just following the product oriented approach.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Arcor: Global Strategy and Local Turbulence (Abridged) 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 Arcor Argentine 's lucrative customers.
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 -
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.
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.
Developing new processes and practices
– Arcor Argentine 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.
Learning at scale
– Online learning technologies has now opened space for Arcor Argentine 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Arcor Argentine 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
– Arcor Argentine 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. Arcor Argentine can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Arcor Argentine can use these opportunities to build new business models that can help the communities that Arcor Argentine operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Arcor Argentine 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, Arcor: Global Strategy and Local Turbulence (Abridged), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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 -
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 .
Stagnating economy with rate increase
– Arcor Argentine 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.
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.
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.
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 Arcor Argentine business can come under increasing regulations regarding data privacy, data security, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Arcor Argentine 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.
Shortening product life cycle
– it is one of the major threat that Arcor Argentine is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Arcor Argentine 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.
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.
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.
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.
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.
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.
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.