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 - – increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion,
technology disruption, increasing household debt because of falling income levels, 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 -
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.
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.
Learning organization
- Feng Dr 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 Feng Dr is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Feng Dr 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing - 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
– 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 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.
Low bargaining power of suppliers
– Suppliers of Feng Dr in the sector have low bargaining power. Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Feng Dr to manage not only supply disruptions but also source products at highly competitive prices.
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.
Training and development
– Feng Dr has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
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.
Highly skilled collaborators
– Feng Dr 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
High operating costs
– Compare to the competitors, firm in the HBR case study Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing 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 Feng Dr 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Feng Dr 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.
Interest costs
– Compare to the competition, Feng Dr 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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing 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 Feng Dr has relatively successful track record of launching new products.
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.
Slow decision making process
– As mentioned earlier in the report, Feng Dr 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. Feng Dr 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.
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.
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.
Need for greater diversity
– Feng Dr 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing, is just above the industry average. Feng Dr 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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Feng Dr can use these opportunities to build new business models that can help the communities that Feng Dr operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Feng Dr 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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Feng Dr to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Feng Dr to hire the very best people irrespective of their geographical location.
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. Feng Dr can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
Building a culture of innovation
– managers at Feng Dr 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.
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.
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. Feng Dr can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 -
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.
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 Feng Dr.
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.
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.
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.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Feng Dr 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, Feng Dr 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 Quality Management in the Oil Industry: How BP Greases Its Machinery for Frictionless Sourcing .
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.
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.
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.
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 .
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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