A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources
On June 23, 2006, Anadarko Petroleum Corporation announced that it was simultaneously acquiring two public companies, Kerr-McGee and Western Gas Resources, in all-cash deals. The total price was about $24 billion, a figure close to Anadarko's market cap at the time. The parallel deal flows and negotiations had been completed in a matter of months. The specific dynamics of this "deal" were extraordinary. Anadarko, Kerr-McGee and Western were all companies with rich and dynamic histories. The combination of resources, processes and people involved in these deals was complex and powerful. The announcement presented a real investor relations challenge for Anadarko. How would Anadarko explain the deals? How would the companies combine to build the most value? What would be divested to pay back the cash? What was the strategy behind these transformative deals? How was this pulled off so quickly and effectively? Subjects include Mergers & Acquisitions
Authors :: Clayton M. Christensen, Curtis B. Rising
Swot Analysis of "A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources" written by Clayton M. Christensen, Curtis B. Rising includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Anadarko Mcgee facing as an external strategic factors. Some of the topics covered in A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources case study are - Strategic Management Strategies, Change management, Costs, Manufacturing, Mergers & acquisitions and Technology & Operations.
Some of the macro environment factors that can be used to understand the A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources casestudy better are - – geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, increasing energy prices, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies,
technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Anadarko Mcgee, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Anadarko Mcgee 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 A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources can be done for the following purposes –
1. Strategic planning using facts provided in A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources case study
2. Improving business portfolio management of Anadarko Mcgee
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Anadarko Mcgee
Strengths A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Anadarko Mcgee in A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources Harvard Business Review case study are -
Ability to recruit top talent
– Anadarko Mcgee is one of the leading recruiters in the industry. Managers in the A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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
– Anadarko Mcgee has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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.
Superior customer experience
– The customer experience strategy of Anadarko Mcgee in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Anadarko Mcgee 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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Anadarko Mcgee digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Anadarko Mcgee 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
– Anadarko Mcgee has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Anadarko Mcgee to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Anadarko Mcgee 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 Anadarko Mcgee is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Technology & Operations industry
– A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources firm has clearly differentiated products in the market place. This has enabled Anadarko Mcgee to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Anadarko Mcgee to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Anadarko Mcgee 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.
Organizational Resilience of Anadarko Mcgee
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Anadarko Mcgee does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Anadarko Mcgee in the sector have low bargaining power. A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Anadarko Mcgee to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Anadarko Mcgee has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Anadarko Mcgee 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.
Weaknesses A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources are -
Lack of clear differentiation of Anadarko Mcgee products
– To increase the profitability and margins on the products, Anadarko Mcgee needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources, is just above the industry average. Anadarko Mcgee 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.
Need for greater diversity
– Anadarko Mcgee 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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 Anadarko Mcgee has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources HBR case study mentions - Anadarko Mcgee 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.
Aligning sales with marketing
– It come across in the case study A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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 A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources can leverage the sales team experience to cultivate customer relationships as Anadarko Mcgee is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Anadarko Mcgee 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.
Interest costs
– Compare to the competition, Anadarko Mcgee 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.
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 Anadarko Mcgee supply chain. Even after few cautionary changes mentioned in the HBR case study - A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Anadarko Mcgee vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Anadarko Mcgee 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.
No frontier risks strategy
– After analyzing the HBR case study A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources, it seems that company is thinking about the frontier risks that can impact Technology & Operations 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.
Opportunities A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources | 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 A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Anadarko Mcgee can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Anadarko Mcgee 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, A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Anadarko Mcgee can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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 Anadarko Mcgee 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 Anadarko Mcgee to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Anadarko Mcgee 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 Technology & Operations segment.
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 Anadarko Mcgee in the consumer business. Now Anadarko Mcgee can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Anadarko Mcgee can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Anadarko Mcgee can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Anadarko Mcgee can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Anadarko Mcgee to increase its market reach. Anadarko Mcgee 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.
Leveraging digital technologies
– Anadarko Mcgee 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.
Using analytics as competitive advantage
– Anadarko Mcgee 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 A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Anadarko Mcgee to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Anadarko Mcgee in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Threats A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources are -
Shortening product life cycle
– it is one of the major threat that Anadarko Mcgee is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Anadarko Mcgee 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources, Anadarko Mcgee may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
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 Anadarko Mcgee.
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.
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 Anadarko Mcgee business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Anadarko Mcgee has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Anadarko Mcgee needs to keep up with the evolution of technology in the Technology & Operations 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.
Regulatory challenges
– Anadarko Mcgee 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 Technology & Operations industry regulations.
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.
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. Anadarko Mcgee 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Anadarko Mcgee 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 A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources .
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Anadarko Mcgee can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Anadarko Mcgee needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Weighted SWOT Analysis of A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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 A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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 A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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 A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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 A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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 Anadarko Mcgee needs to make to build a sustainable competitive advantage.
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