Case Study Description of ICI-Nobel's Explosives Co.
John Clark, business manager of Nobel's Explosives explosives and accessories business, must decide whether to recommend the implementation of a new technology, developed by ICI Explosives Australia, for supplying explosives in bulk to the quarrying industry in the United Kingdom. Faced with declining demand in traditional markets, overcapacity in the industry, fierce price competition, and low customer loyalty, the new technology represents an opportunity to differentiate a commodity product offering through service enhancement. However, an assessment must be made of the impact of the new technology on supply chain management within the business, the appropriateness of the current material planning and control system, as well as the need to re-engineer the order-to-delivery process.
Authors :: Robert S. Collins, Michael L. Gibbs, Henning Von Spreckelsen
Swot Analysis of "ICI-Nobel's Explosives Co." written by Robert S. Collins, Michael L. Gibbs, Henning Von Spreckelsen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Explosives Nobel's facing as an external strategic factors. Some of the topics covered in ICI-Nobel's Explosives Co. case study are - Strategic Management Strategies, Financial markets, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the ICI-Nobel's Explosives Co. casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google,
increasing transportation and logistics costs, increasing commodity prices, etc
Introduction to SWOT Analysis of ICI-Nobel's Explosives Co.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ICI-Nobel's Explosives Co. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Explosives Nobel's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Explosives Nobel's 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 ICI-Nobel's Explosives Co. can be done for the following purposes –
1. Strategic planning using facts provided in ICI-Nobel's Explosives Co. case study
2. Improving business portfolio management of Explosives Nobel's
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 Explosives Nobel's
Strengths ICI-Nobel's Explosives Co. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Explosives Nobel's in ICI-Nobel's Explosives Co. Harvard Business Review case study are -
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Explosives Nobel's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Explosives Nobel's 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.
Analytics focus
– Explosives Nobel's 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 Robert S. Collins, Michael L. Gibbs, Henning Von Spreckelsen 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.
Diverse revenue streams
– Explosives Nobel's is present in almost all the verticals within the industry. This has provided firm in ICI-Nobel's Explosives Co. 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.
Sustainable margins compare to other players in Technology & Operations industry
– ICI-Nobel's Explosives Co. firm has clearly differentiated products in the market place. This has enabled Explosives Nobel's to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Explosives Nobel's to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Explosives Nobel's 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.
Effective Research and Development (R&D)
– Explosives Nobel's 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 ICI-Nobel's Explosives Co. - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Explosives Nobel's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Explosives Nobel's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Explosives Nobel's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Explosives Nobel's 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.
Ability to lead change in Technology & Operations field
– Explosives Nobel's 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 Explosives Nobel's 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 Explosives Nobel's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the ICI-Nobel's Explosives Co. 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.
Cross disciplinary teams
– Horizontal connected teams at the Explosives Nobel's 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.
Weaknesses ICI-Nobel's Explosives Co. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ICI-Nobel's Explosives Co. are -
Increasing silos among functional specialists
– The organizational structure of Explosives Nobel's is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Explosives Nobel's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Explosives Nobel's to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Explosives Nobel's 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.
Skills based hiring
– The stress on hiring functional specialists at Explosives Nobel's 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 bargaining power of channel partners
– Because of the regulatory requirements, Robert S. Collins, Michael L. Gibbs, Henning Von Spreckelsen suggests that, Explosives Nobel's 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, Explosives Nobel's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study ICI-Nobel's Explosives Co. can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ICI-Nobel's Explosives Co., is just above the industry average. Explosives Nobel's 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 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 Explosives Nobel's supply chain. Even after few cautionary changes mentioned in the HBR case study - ICI-Nobel's Explosives Co., it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Explosives Nobel's vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As ICI-Nobel's Explosives Co. HBR case study mentions - Explosives Nobel's 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Explosives Nobel's 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.
Aligning sales with marketing
– It come across in the case study ICI-Nobel's Explosives Co. 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 ICI-Nobel's Explosives Co. can leverage the sales team experience to cultivate customer relationships as Explosives Nobel's is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study ICI-Nobel's Explosives Co., 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 ICI-Nobel's Explosives Co. | 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 ICI-Nobel's Explosives Co. are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Explosives Nobel's is facing challenges because of the dominance of functional experts in the organization. ICI-Nobel's Explosives Co. 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Explosives Nobel's 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Explosives Nobel's 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Explosives Nobel's 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 Explosives Nobel's to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Explosives Nobel's 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.
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 Explosives Nobel's in the consumer business. Now Explosives Nobel's can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Explosives Nobel's 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, Explosives Nobel's 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, ICI-Nobel's Explosives Co., to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Explosives Nobel's can develop new processes and procedures in Technology & Operations 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Explosives Nobel's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Explosives Nobel's 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 ICI-Nobel's Explosives Co. - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Explosives Nobel's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Explosives Nobel's 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. Explosives Nobel's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Explosives Nobel's can use these opportunities to build new business models that can help the communities that Explosives Nobel's operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Threats ICI-Nobel's Explosives Co. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ICI-Nobel's Explosives Co. are -
Regulatory challenges
– Explosives Nobel's 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Explosives Nobel's 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.
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. Explosives Nobel's 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.
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.
Consumer confidence and its impact on Explosives Nobel's 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.
Technology acceleration in Forth Industrial Revolution
– Explosives Nobel's has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Explosives Nobel's 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.
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. Explosives Nobel's needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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 Explosives Nobel's in the Technology & Operations sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Explosives Nobel's is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Explosives Nobel's 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 ICI-Nobel's Explosives Co. .
High dependence on third party suppliers
– Explosives Nobel's 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.
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 Explosives Nobel's business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Explosives Nobel's 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 ICI-Nobel's Explosives Co. 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 ICI-Nobel's Explosives Co. 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 ICI-Nobel's Explosives Co. 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 ICI-Nobel's Explosives Co. 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 ICI-Nobel's Explosives Co. 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 Explosives Nobel's needs to make to build a sustainable competitive advantage.
