A farmer can lock in the prices of his product and wants to know how much, if any, of the production should be hedged. This case examines how the answer is affected by factors such as the certainty of how much will be produced, the relationship between prices and production, and the risk aversion of the farmer. This case permits an analysis of how hedging policies should change reflecting the different behavior of the variables that affect the results.
Swot Analysis of "John Carter: Hedging" written by Samuel E Bodily, Lee Fiedler includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Farmer Hedging facing as an external strategic factors. Some of the topics covered in John Carter: Hedging case study are - Strategic Management Strategies, Pricing, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the John Carter: Hedging casestudy better are - – talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, increasing energy prices, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, technology disruption,
competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of John Carter: Hedging
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in John Carter: Hedging case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Farmer Hedging, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Farmer Hedging 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 John Carter: Hedging can be done for the following purposes –
1. Strategic planning using facts provided in John Carter: Hedging case study
2. Improving business portfolio management of Farmer Hedging
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 Farmer Hedging
Strengths John Carter: Hedging | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Farmer Hedging in John Carter: Hedging Harvard Business Review case study are -
Ability to lead change in Strategy & Execution field
– Farmer Hedging 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 Farmer Hedging in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Farmer Hedging is one of the leading recruiters in the industry. Managers in the John Carter: Hedging 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
- Farmer Hedging 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 Farmer Hedging is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in John Carter: Hedging Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Farmer Hedging has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Farmer Hedging has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Farmer Hedging in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Farmer Hedging in the sector have low bargaining power. John Carter: Hedging has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Farmer Hedging to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Farmer Hedging is present in almost all the verticals within the industry. This has provided firm in John Carter: Hedging case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Strong track record of project management
– Farmer Hedging is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Farmer Hedging 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 John Carter: Hedging - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Farmer Hedging 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 Samuel E Bodily, Lee Fiedler 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Farmer Hedging digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Farmer Hedging 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 brand equity
– Farmer Hedging has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Farmer Hedging to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses John Carter: Hedging | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of John Carter: Hedging are -
Lack of clear differentiation of Farmer Hedging products
– To increase the profitability and margins on the products, Farmer Hedging needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Farmer Hedging 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study John Carter: Hedging, is just above the industry average. Farmer Hedging 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the John Carter: Hedging 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 Farmer Hedging has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Farmer Hedging is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Farmer Hedging needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Farmer Hedging to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Farmer Hedging has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Aligning sales with marketing
– It come across in the case study John Carter: Hedging 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 John Carter: Hedging can leverage the sales team experience to cultivate customer relationships as Farmer Hedging is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Samuel E Bodily, Lee Fiedler suggests that, Farmer Hedging 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Farmer Hedging is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study John Carter: Hedging can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study John Carter: Hedging, it seems that the employees of Farmer Hedging 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.
Low market penetration in new markets
– Outside its home market of Farmer Hedging, firm in the HBR case study John Carter: Hedging needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities John Carter: Hedging | 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 John Carter: Hedging are -
Better consumer reach
– The expansion of the 5G network will help Farmer Hedging to increase its market reach. Farmer Hedging 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Farmer Hedging 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.
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 Farmer Hedging 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.
Loyalty marketing
– Farmer Hedging 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Farmer Hedging can use these opportunities to build new business models that can help the communities that Farmer Hedging 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 Farmer Hedging can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Farmer Hedging 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Farmer Hedging 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Farmer Hedging is facing challenges because of the dominance of functional experts in the organization. John Carter: Hedging 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. Farmer Hedging 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. Farmer Hedging 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.
Leveraging digital technologies
– Farmer Hedging 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Farmer Hedging 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, John Carter: Hedging, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Farmer Hedging 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 John Carter: Hedging - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Farmer Hedging to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats John Carter: Hedging External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study John Carter: Hedging 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 Farmer Hedging in the Strategy & Execution sector and impact the bottomline of the organization.
Consumer confidence and its impact on Farmer Hedging 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Farmer Hedging 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 John Carter: Hedging .
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 Farmer Hedging.
Technology acceleration in Forth Industrial Revolution
– Farmer Hedging has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Farmer Hedging 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
– Farmer Hedging 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.
Increasing wage structure of Farmer Hedging
– 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 Farmer Hedging.
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.
Environmental challenges
– Farmer Hedging needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Farmer Hedging can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Farmer Hedging business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Farmer Hedging 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.
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. Farmer Hedging 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.
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. Farmer Hedging needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Weighted SWOT Analysis of John Carter: Hedging 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 John Carter: Hedging 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 John Carter: Hedging 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 John Carter: Hedging 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 John Carter: Hedging 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 Farmer Hedging needs to make to build a sustainable competitive advantage.
