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 - – increasing commodity prices, talent flight as more people leaving formal jobs, geopolitical disruptions, there is backlash against globalization, wage bills are increasing, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google,
increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, 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 -
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.
Ability to lead change in Technology & Operations field
– Anadarko Mcgee 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 Anadarko Mcgee in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Anadarko Mcgee 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 A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Analytics focus
– Anadarko Mcgee 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 Clayton M. Christensen, Curtis B. Rising 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.
Innovation driven organization
– Anadarko Mcgee is one of the most innovative firm in sector. Manager in A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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
– Anadarko Mcgee is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
Diverse revenue streams
– Anadarko Mcgee is present in almost all the verticals within the industry. This has provided firm in A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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.
Operational resilience
– The operational resilience strategy in the A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Highly skilled collaborators
– Anadarko Mcgee has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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 -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources, it seems that the employees of Anadarko Mcgee 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.
Slow decision making process
– As mentioned earlier in the report, Anadarko Mcgee has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Anadarko Mcgee even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Products dominated business model
– Even though Anadarko Mcgee 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 - A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Anadarko Mcgee 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.
High operating costs
– Compare to the competitors, firm in the HBR case study A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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 Anadarko Mcgee 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Anadarko Mcgee is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Clayton M. Christensen, Curtis B. Rising suggests that, Anadarko Mcgee 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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Anadarko Mcgee 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.
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.
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 -
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.
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.
Loyalty marketing
– Anadarko Mcgee 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.
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 Anadarko Mcgee 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.
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.
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.
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.
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Anadarko Mcgee 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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Anadarko Mcgee is facing challenges because of the dominance of functional experts in the organization. A Big (Double) Deal: Anadarko's Acquisition of Kerr-McGee and Western Gas Resources 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.
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 -
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.
Increasing wage structure of Anadarko Mcgee
– 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 Anadarko Mcgee.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Anadarko Mcgee with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Anadarko Mcgee in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Anadarko Mcgee 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. Anadarko Mcgee can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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 Anadarko Mcgee in the Technology & Operations sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Anadarko Mcgee 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.
High dependence on third party suppliers
– Anadarko Mcgee 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.
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.
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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