In April 1987 the management team of CFM International, Inc. (CFMI) was considering developing a new jet engine for the Airbus A340. The withdrawal of a competitor's engine had created an unforeseen opportunity for CFMI to re-enter a competition it had apparently lost several months earlier. Complicating the decision was the fact that CFMI was a corporation jointly and equally owned by General Electric (U.S.) and the Societe Nationale d'Etude et de Construction de Moteurs d'Aviation, or SNECMA (France), both of which had to approve any new programs. Both General Electric and SNECMA, the owning companies, had already moved on to other projects. Allows for discussion of international alliances in a high stakes, politically salient, global industry. Also addresses large investment decisions in an uncertain environment.
Swot Analysis of "CFM International, Inc." written by Michael J. Enright includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cfmi Snecma facing as an external strategic factors. Some of the topics covered in CFM International, Inc. case study are - Strategic Management Strategies, Financial management, International business, Joint ventures, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the CFM International, Inc. casestudy better are - – increasing household debt because of falling income levels, geopolitical disruptions, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China,
central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of CFM International, Inc.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CFM International, Inc. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cfmi Snecma, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cfmi Snecma 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 CFM International, Inc. can be done for the following purposes –
1. Strategic planning using facts provided in CFM International, Inc. case study
2. Improving business portfolio management of Cfmi Snecma
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 Cfmi Snecma
Strengths CFM International, Inc. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cfmi Snecma in CFM International, Inc. Harvard Business Review case study are -
Analytics focus
– Cfmi Snecma 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 Michael J. Enright 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.
High brand equity
– Cfmi Snecma has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cfmi Snecma to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Cfmi Snecma in the sector have low bargaining power. CFM International, Inc. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cfmi Snecma to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Cfmi Snecma is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Cfmi Snecma 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 recruit top talent
– Cfmi Snecma is one of the leading recruiters in the industry. Managers in the CFM International, Inc. are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Cfmi Snecma 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 Cfmi Snecma is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in CFM International, Inc. Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Cfmi Snecma has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in CFM International, Inc. 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.
Effective Research and Development (R&D)
– Cfmi Snecma 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 CFM International, Inc. - 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
– CFM International, Inc. firm has clearly differentiated products in the market place. This has enabled Cfmi Snecma to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Cfmi Snecma to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Cfmi Snecma in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Cfmi Snecma
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cfmi Snecma does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses CFM International, Inc. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CFM International, Inc. are -
Increasing silos among functional specialists
– The organizational structure of Cfmi Snecma is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cfmi Snecma needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cfmi Snecma to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Cfmi Snecma, firm in the HBR case study CFM International, Inc. needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Cfmi Snecma products
– To increase the profitability and margins on the products, Cfmi Snecma needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Cfmi Snecma needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High operating costs
– Compare to the competitors, firm in the HBR case study CFM International, Inc. 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 Cfmi Snecma 's lucrative customers.
Aligning sales with marketing
– It come across in the case study CFM International, Inc. 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 CFM International, Inc. can leverage the sales team experience to cultivate customer relationships as Cfmi Snecma is planning to shift buying processes online.
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 Cfmi Snecma supply chain. Even after few cautionary changes mentioned in the HBR case study - CFM International, Inc., it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cfmi Snecma vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the CFM International, Inc. 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 Cfmi Snecma has relatively successful track record of launching new products.
Products dominated business model
– Even though Cfmi Snecma 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 - CFM International, Inc. should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Cfmi Snecma 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study CFM International, Inc., it seems that the employees of Cfmi Snecma 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 CFM International, Inc. | 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 CFM International, Inc. are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Cfmi Snecma in the consumer business. Now Cfmi Snecma can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cfmi Snecma can use these opportunities to build new business models that can help the communities that Cfmi Snecma operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cfmi Snecma can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Cfmi Snecma has opened avenues for new revenue streams for the organization in the industry. This can help Cfmi Snecma to build a more holistic ecosystem as suggested in the CFM International, Inc. case study. Cfmi Snecma can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Cfmi Snecma to increase its market reach. Cfmi Snecma 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.
Using analytics as competitive advantage
– Cfmi Snecma 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 CFM International, Inc. - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cfmi Snecma to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cfmi Snecma 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, CFM International, Inc., to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Cfmi Snecma can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Cfmi Snecma 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. Cfmi Snecma 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cfmi Snecma 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cfmi Snecma 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cfmi Snecma is facing challenges because of the dominance of functional experts in the organization. CFM International, Inc. 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 Cfmi Snecma 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.
Threats CFM International, Inc. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CFM International, Inc. are -
High dependence on third party suppliers
– Cfmi Snecma 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.
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. Cfmi Snecma can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Cfmi Snecma has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cfmi Snecma 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.
Stagnating economy with rate increase
– Cfmi Snecma 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.
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.
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 Cfmi Snecma in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing wage structure of Cfmi Snecma
– 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 Cfmi Snecma.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cfmi Snecma 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 CFM International, Inc. .
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.
Regulatory challenges
– Cfmi Snecma 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.
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. Cfmi Snecma 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.
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 Cfmi Snecma business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Cfmi Snecma 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.
Weighted SWOT Analysis of CFM International, Inc. 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 CFM International, Inc. 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 CFM International, Inc. 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 CFM International, Inc. 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 CFM International, Inc. 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 Cfmi Snecma needs to make to build a sustainable competitive advantage.