Cargill: Keeping the Family Business Private SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Cargill: Keeping the Family Business Private
When Margaret A. Cargill passed away in 2006, her 17.5 per cent stake in Cargill went to Margaret A. Cargill Philanthropies (MAC). MAC lobbied for her stake to be liquidated. Cargill proceeded to shed its 64 per cent stake in Mosaic, North America's second-largest fertilizer company, in exchange for Margaret Cargill's stake in the company, in order to maintain control over the company. Like many second- and third-generation family businesses, Cargill's current family owners were not actively involved in the day-to-day running of the company. Was spinning off Mosaic in the best long-term interests of Cargill? Were there other feasible ways in which Cargill could have better facilitated the liquidation of Margaret Cargill's stake? Ruth S. K. Tan is affiliated with NUS Business School. Yupana Wiwattanakantang is affiliated with NUS Business School.
Swot Analysis of "Cargill: Keeping the Family Business Private" written by Ruth S.K. Tan, Yupana Wiwattanakantang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cargill Cargill's facing as an external strategic factors. Some of the topics covered in Cargill: Keeping the Family Business Private case study are - Strategic Management Strategies, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Cargill: Keeping the Family Business Private casestudy better are - – increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, increasing commodity prices, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing household debt because of falling income levels,
increasing energy prices, technology disruption, etc
Introduction to SWOT Analysis of Cargill: Keeping the Family Business Private
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cargill: Keeping the Family Business Private case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cargill Cargill's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cargill Cargill'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 Cargill: Keeping the Family Business Private can be done for the following purposes –
1. Strategic planning using facts provided in Cargill: Keeping the Family Business Private case study
2. Improving business portfolio management of Cargill Cargill's
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cargill Cargill's
Strengths Cargill: Keeping the Family Business Private | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cargill Cargill's in Cargill: Keeping the Family Business Private Harvard Business Review case study are -
Effective Research and Development (R&D)
– Cargill Cargill'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 Cargill: Keeping the Family Business Private - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Finance & Accounting industry
– Cargill: Keeping the Family Business Private firm has clearly differentiated products in the market place. This has enabled Cargill Cargill's to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Cargill Cargill's to invest into research and development (R&D) and innovation.
Strong track record of project management
– Cargill Cargill's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Cargill Cargill's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Cargill: Keeping the Family Business Private 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.
Successful track record of launching new products
– Cargill Cargill's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cargill Cargill'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.
Learning organization
- Cargill Cargill's 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 Cargill Cargill's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Cargill: Keeping the Family Business Private Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Cargill Cargill's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cargill Cargill's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Cargill: Keeping the Family Business Private 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
– Cargill Cargill's 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 Cargill: Keeping the Family Business Private HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Cargill Cargill'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 Ruth S.K. Tan, Yupana Wiwattanakantang 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.
Low bargaining power of suppliers
– Suppliers of Cargill Cargill's in the sector have low bargaining power. Cargill: Keeping the Family Business Private has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cargill Cargill's to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Cargill Cargill's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cargill Cargill'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.
Weaknesses Cargill: Keeping the Family Business Private | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cargill: Keeping the Family Business Private are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Cargill: Keeping the Family Business Private, is just above the industry average. Cargill Cargill'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.
Increasing silos among functional specialists
– The organizational structure of Cargill Cargill's is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Cargill Cargill's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cargill Cargill's to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Cargill Cargill's 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. Cargill Cargill's 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cargill Cargill's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Cargill: Keeping the Family Business Private can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Cargill: Keeping the Family Business Private 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 Cargill: Keeping the Family Business Private can leverage the sales team experience to cultivate customer relationships as Cargill Cargill's is planning to shift buying processes online.
Need for greater diversity
– Cargill Cargill's 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.
Capital Spending Reduction
– Even during the low interest decade, Cargill Cargill's 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.
Skills based hiring
– The stress on hiring functional specialists at Cargill Cargill'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.
Slow to strategic competitive environment developments
– As Cargill: Keeping the Family Business Private HBR case study mentions - Cargill Cargill'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.
Products dominated business model
– Even though Cargill Cargill's 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 - Cargill: Keeping the Family Business Private should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Cargill: Keeping the Family Business Private, in the dynamic environment Cargill Cargill's has struggled to respond to the nimble upstart competition. Cargill Cargill's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Cargill: Keeping the Family Business Private | 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 Cargill: Keeping the Family Business Private are -
Better consumer reach
– The expansion of the 5G network will help Cargill Cargill's to increase its market reach. Cargill Cargill's 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.
Developing new processes and practices
– Cargill Cargill's can develop new processes and procedures in Finance & Accounting 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Cargill Cargill's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Cargill Cargill's 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.
Leveraging digital technologies
– Cargill Cargill'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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cargill Cargill'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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cargill Cargill'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 Finance & Accounting segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cargill Cargill's is facing challenges because of the dominance of functional experts in the organization. Cargill: Keeping the Family Business Private 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 Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cargill Cargill'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. Cargill Cargill'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.
Loyalty marketing
– Cargill Cargill's 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.
Using analytics as competitive advantage
– Cargill Cargill'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 Cargill: Keeping the Family Business Private - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cargill Cargill's 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. Cargill Cargill's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Cargill Cargill's can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Threats Cargill: Keeping the Family Business Private External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cargill: Keeping the Family Business Private are -
Environmental challenges
– Cargill Cargill's 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. Cargill Cargill's can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Shortening product life cycle
– it is one of the major threat that Cargill Cargill's is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cargill Cargill's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Cargill Cargill'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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Cargill: Keeping the Family Business Private, Cargill Cargill's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cargill Cargill's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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. Cargill Cargill'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.
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 Cargill Cargill's business can come under increasing regulations regarding data privacy, data security, etc.
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 Cargill Cargill's.
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 Cargill Cargill's in the Finance & Accounting sector and impact the bottomline of the organization.
Regulatory challenges
– Cargill Cargill'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 Finance & Accounting industry regulations.
Consumer confidence and its impact on Cargill Cargill'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.
Weighted SWOT Analysis of Cargill: Keeping the Family Business Private 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 Cargill: Keeping the Family Business Private 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 Cargill: Keeping the Family Business Private 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 Cargill: Keeping the Family Business Private 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 Cargill: Keeping the Family Business Private 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 Cargill Cargill's needs to make to build a sustainable competitive advantage.
