Valuing Infrastructure Investment: An Option Games Approach SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Valuing Infrastructure Investment: An Option Games Approach
To understand the recent trend toward privatization of infrastructure assets (e.g., airports), this article proposes a valuation methodology based on real options and game theory analysis that enables assessing when investors might overpay for infrastructure assets over standard discounted cash flow methods and when a premium is justified for their operating flexibility or strategic growth option value. While some infrastructure asset acquisitions may involve financial transactions whose value derives primarily from their expected cash flows, many of these infrastructure investments provide a platform and create the strategic context within which the firm can grow.
Swot Analysis of "Valuing Infrastructure Investment: An Option Games Approach" written by Lenos Trigeorgis, Han T.J. Smit includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Infrastructure Overpay facing as an external strategic factors. Some of the topics covered in Valuing Infrastructure Investment: An Option Games Approach case study are - Strategic Management Strategies, Competitive strategy, Financial analysis, Financial management, Financial markets, International business and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Valuing Infrastructure Investment: An Option Games Approach casestudy better are - – talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, 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%, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, increasing government debt because of Covid-19 spendings,
digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, etc
Introduction to SWOT Analysis of Valuing Infrastructure Investment: An Option Games Approach
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Valuing Infrastructure Investment: An Option Games Approach case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Infrastructure Overpay, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Infrastructure Overpay 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 Valuing Infrastructure Investment: An Option Games Approach can be done for the following purposes –
1. Strategic planning using facts provided in Valuing Infrastructure Investment: An Option Games Approach case study
2. Improving business portfolio management of Infrastructure Overpay
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 Infrastructure Overpay
Strengths Valuing Infrastructure Investment: An Option Games Approach | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Infrastructure Overpay in Valuing Infrastructure Investment: An Option Games Approach Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Infrastructure Overpay 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.
Ability to recruit top talent
– Infrastructure Overpay is one of the leading recruiters in the industry. Managers in the Valuing Infrastructure Investment: An Option Games Approach are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Infrastructure Overpay has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Infrastructure Overpay to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Infrastructure Overpay
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Infrastructure Overpay does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Infrastructure Overpay digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Infrastructure Overpay 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.
Low bargaining power of suppliers
– Suppliers of Infrastructure Overpay in the sector have low bargaining power. Valuing Infrastructure Investment: An Option Games Approach has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Infrastructure Overpay to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Infrastructure Overpay 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 Valuing Infrastructure Investment: An Option Games Approach - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Strategy & Execution field
– Infrastructure Overpay 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 Infrastructure Overpay in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Infrastructure Overpay in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Infrastructure Overpay is one of the most innovative firm in sector. Manager in Valuing Infrastructure Investment: An Option Games Approach Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Infrastructure Overpay is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Strategy & Execution industry
– Valuing Infrastructure Investment: An Option Games Approach firm has clearly differentiated products in the market place. This has enabled Infrastructure Overpay to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Infrastructure Overpay to invest into research and development (R&D) and innovation.
Weaknesses Valuing Infrastructure Investment: An Option Games Approach | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Valuing Infrastructure Investment: An Option Games Approach are -
Increasing silos among functional specialists
– The organizational structure of Infrastructure Overpay is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Infrastructure Overpay needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Infrastructure Overpay to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Infrastructure Overpay 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.
Aligning sales with marketing
– It come across in the case study Valuing Infrastructure Investment: An Option Games Approach 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 Valuing Infrastructure Investment: An Option Games Approach can leverage the sales team experience to cultivate customer relationships as Infrastructure Overpay is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Infrastructure Overpay is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Valuing Infrastructure Investment: An Option Games Approach can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Infrastructure Overpay 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 - Valuing Infrastructure Investment: An Option Games Approach should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Valuing Infrastructure Investment: An Option Games Approach, 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 to strategic competitive environment developments
– As Valuing Infrastructure Investment: An Option Games Approach HBR case study mentions - Infrastructure Overpay 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.
Low market penetration in new markets
– Outside its home market of Infrastructure Overpay, firm in the HBR case study Valuing Infrastructure Investment: An Option Games Approach needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Infrastructure Overpay 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.
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 Infrastructure Overpay supply chain. Even after few cautionary changes mentioned in the HBR case study - Valuing Infrastructure Investment: An Option Games Approach, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Infrastructure Overpay vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Infrastructure Overpay 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.
Opportunities Valuing Infrastructure Investment: An Option Games Approach | 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 Valuing Infrastructure Investment: An Option Games Approach are -
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. Infrastructure Overpay can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Infrastructure Overpay has opened avenues for new revenue streams for the organization in the industry. This can help Infrastructure Overpay to build a more holistic ecosystem as suggested in the Valuing Infrastructure Investment: An Option Games Approach case study. Infrastructure Overpay can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Infrastructure Overpay 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.
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 Infrastructure Overpay in the consumer business. Now Infrastructure Overpay can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Infrastructure Overpay 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.
Learning at scale
– Online learning technologies has now opened space for Infrastructure Overpay 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.
Better consumer reach
– The expansion of the 5G network will help Infrastructure Overpay to increase its market reach. Infrastructure Overpay 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Infrastructure Overpay 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, Valuing Infrastructure Investment: An Option Games Approach, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Infrastructure Overpay is facing challenges because of the dominance of functional experts in the organization. Valuing Infrastructure Investment: An Option Games Approach 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.
Buying journey improvements
– Infrastructure Overpay can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Valuing Infrastructure Investment: An Option Games Approach 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.
Developing new processes and practices
– Infrastructure Overpay 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.
Loyalty marketing
– Infrastructure Overpay 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. Infrastructure Overpay can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Valuing Infrastructure Investment: An Option Games Approach External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Valuing Infrastructure Investment: An Option Games Approach are -
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 Infrastructure Overpay in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Infrastructure Overpay 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 Valuing Infrastructure Investment: An Option Games Approach .
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.
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Infrastructure Overpay needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Infrastructure Overpay 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Valuing Infrastructure Investment: An Option Games Approach, Infrastructure Overpay 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 .
Consumer confidence and its impact on Infrastructure Overpay 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.
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 Infrastructure Overpay.
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. Infrastructure Overpay 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 Infrastructure Overpay business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Infrastructure Overpay 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Infrastructure Overpay with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Valuing Infrastructure Investment: An Option Games Approach 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 Valuing Infrastructure Investment: An Option Games Approach 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 Valuing Infrastructure Investment: An Option Games Approach 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 Valuing Infrastructure Investment: An Option Games Approach 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 Valuing Infrastructure Investment: An Option Games Approach 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 Infrastructure Overpay needs to make to build a sustainable competitive advantage.
