Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing
It was the cold winter of 2010 in Shanghai, and Dr. Zeb Feng was becoming increasingly frustrated. As procurement director for Asia at British Petroleum (BP), Dr. Feng was acutely aware of the growing burden that quality control imposed over his company's global operations. Chinese suppliers were masters of cost-cutting, but quality often suffered as a result, which led in turn to increasing needs for inspection and development efforts. Almost five years ago, Dr. Feng's company established an international procurement office (IPO) in Shanghai, which served as a shared service centre for internal customers throughout the BP organization worldwide. Since that time, the IPO had been mainly sourcing non-hydrocarbon goods and services, such as manufacturing equipment and materials, packaging, catalysts, chemicals and additives, marketing products and retail equipment, as well as drilling services and well-completion services. After a corporate board meeting with Christina De Luca, the vice-president of procurement and supply-chain management for BP's downstream operations, it had been decided that the company would start to enhance its global competitive sourcing. As the number one supplier market in the world, China was naturally highly prioritized for further exploration. The pressing point that concerned Dr. Feng was whether Chinese suppliers were sufficiently ready to supply mission-critical supplies for oil drilling, extraction and refining. During a recent conference call, De Luca had reiterated, "Zeb, our competitors are way ahead of us in their sourcing operations, and they have achieved much lower costs. We've got to do something!" Dr. Feng put down the receiver and went back to his office to gather his team for a planning meeting. He knew that supply quality was the key issue, but how could it be resolved?
Authors :: Martin Lockstrom, Shen Li, Shengrong Zhang
Swot Analysis of "Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing" written by Martin Lockstrom, Shen Li, Shengrong Zhang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Feng Dr facing as an external strategic factors. Some of the topics covered in Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing case study are - Strategic Management Strategies, IPO, Product development, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing casestudy better are - – technology disruption, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, wage bills are increasing,
supply chains are disrupted by pandemic , increasing energy prices, etc
Introduction to SWOT Analysis of Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Feng Dr, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Feng Dr 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing can be done for the following purposes –
1. Strategic planning using facts provided in Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing case study
2. Improving business portfolio management of Feng Dr
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 Feng Dr
Strengths Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Feng Dr in Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing firm has clearly differentiated products in the market place. This has enabled Feng Dr to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Feng Dr to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Feng Dr 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.
Ability to lead change in Strategy & Execution field
– Feng Dr 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 Feng Dr in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Feng Dr
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Feng Dr does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Feng Dr has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Feng Dr to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Feng Dr in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Feng Dr is one of the leading recruiters in the industry. Managers in the Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Feng Dr is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Feng Dr 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Feng Dr digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Feng Dr 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.
Operational resilience
– The operational resilience strategy in the Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing 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.
Analytics focus
– Feng Dr 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 Martin Lockstrom, Shen Li, Shengrong Zhang 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.
Weaknesses Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing are -
No frontier risks strategy
– After analyzing the HBR case study Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing, 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.
Low market penetration in new markets
– Outside its home market of Feng Dr, firm in the HBR case study Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Feng Dr 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 - Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Feng Dr is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Feng Dr needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Feng Dr to focus more on services rather than just following the product oriented approach.
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 Feng Dr supply chain. Even after few cautionary changes mentioned in the HBR case study - Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Feng Dr vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing can leverage the sales team experience to cultivate customer relationships as Feng Dr is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing, in the dynamic environment Feng Dr has struggled to respond to the nimble upstart competition. Feng Dr has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Feng Dr 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 bargaining power of channel partners
– Because of the regulatory requirements, Martin Lockstrom, Shen Li, Shengrong Zhang suggests that, Feng Dr 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.
Slow to strategic competitive environment developments
– As Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing HBR case study mentions - Feng Dr 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing, it seems that the employees of Feng Dr 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.
Opportunities Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing | 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing are -
Leveraging digital technologies
– Feng Dr can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Buying journey improvements
– Feng Dr can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing 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.
Creating value in data economy
– The success of analytics program of Feng Dr has opened avenues for new revenue streams for the organization in the industry. This can help Feng Dr to build a more holistic ecosystem as suggested in the Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing case study. Feng Dr can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Feng Dr can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Feng Dr 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Feng Dr is facing challenges because of the dominance of functional experts in the organization. Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing 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.
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. Feng Dr 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. Feng Dr 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Feng Dr 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, Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing, 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
– Feng Dr 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.
Learning at scale
– Online learning technologies has now opened space for Feng Dr 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.
Loyalty marketing
– Feng Dr 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Feng Dr 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.
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 Feng Dr in the consumer business. Now Feng Dr can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing are -
Technology acceleration in Forth Industrial Revolution
– Feng Dr has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Feng Dr 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 Feng Dr 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.
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. Feng Dr can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Feng Dr 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.
Consumer confidence and its impact on Feng Dr 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 Feng Dr
– 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 Feng Dr.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing, Feng Dr may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Feng Dr business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Feng Dr 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.
High dependence on third party suppliers
– Feng Dr high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Feng Dr in the Strategy & Execution sector and impact the bottomline of the organization.
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. Feng Dr 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing 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 Feng Dr needs to make to build a sustainable competitive advantage.
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