Nextel Peru: Emerging Market Cost of Capital, Spanish Version SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Nextel Peru: Emerging Market Cost of Capital, Spanish Version
NII Holdings, Inc. is a U.S. firm with headquarters in Reston, Virginia, and has wireless telephony operations under the Nextel brand in Argentina, Brazil, Chile, Mexico, and Peru. During 2012, as the firm struggled with a weak competitive position and a transition to a new 3G platform, its operating results suffered, and a number of analysts were concerned about the firm's liquidity. Against this backdrop, NII decides to refocus its operations on Mexico and Brazil. In April 2013, the company enters into an agreement to sell Nextel Peru to Empresa Nacional de Telecomunicaciones S.A. (Entel) for between $397 million and $415 million. Through the use of Andean Capital Advisors, and its first-year associate Rafael d'Anconia, the case is meant to demonstrate concepts surrounding the derivation of the cost of capital in international settings. The case was designed for use in first-year MBA courses, but it can also be adopted for courses focusing on international finance.
Swot Analysis of "Nextel Peru: Emerging Market Cost of Capital, Spanish Version" written by Luis M. Viceira, Joel L. Heilprin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nextel Peru facing as an external strategic factors. Some of the topics covered in Nextel Peru: Emerging Market Cost of Capital, Spanish Version case study are - Strategic Management Strategies, Financial analysis, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Nextel Peru: Emerging Market Cost of Capital, Spanish Version casestudy better are - – geopolitical disruptions, increasing commodity prices, increasing household debt because of falling income levels, increasing energy prices, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies,
competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Nextel Peru: Emerging Market Cost of Capital, Spanish Version
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nextel Peru: Emerging Market Cost of Capital, Spanish Version case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nextel Peru, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nextel Peru 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 Nextel Peru: Emerging Market Cost of Capital, Spanish Version can be done for the following purposes –
1. Strategic planning using facts provided in Nextel Peru: Emerging Market Cost of Capital, Spanish Version case study
2. Improving business portfolio management of Nextel Peru
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 Nextel Peru
Strengths Nextel Peru: Emerging Market Cost of Capital, Spanish Version | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nextel Peru in Nextel Peru: Emerging Market Cost of Capital, Spanish Version Harvard Business Review case study are -
Ability to recruit top talent
– Nextel Peru is one of the leading recruiters in the industry. Managers in the Nextel Peru: Emerging Market Cost of Capital, Spanish Version are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Nextel Peru 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 Nextel Peru: Emerging Market Cost of Capital, Spanish Version HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Nextel Peru 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)
– Nextel Peru 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 Nextel Peru: Emerging Market Cost of Capital, Spanish Version - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Nextel Peru in the sector have low bargaining power. Nextel Peru: Emerging Market Cost of Capital, Spanish Version has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nextel Peru to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Nextel Peru 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
– Nextel Peru has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Nextel Peru: Emerging Market Cost of Capital, Spanish Version 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Nextel Peru: Emerging Market Cost of Capital, Spanish Version firm has clearly differentiated products in the market place. This has enabled Nextel Peru to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Nextel Peru to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Nextel Peru 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.
Operational resilience
– The operational resilience strategy in the Nextel Peru: Emerging Market Cost of Capital, Spanish Version 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.
High brand equity
– Nextel Peru has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Nextel Peru to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Nextel Peru 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 Nextel Peru is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Nextel Peru: Emerging Market Cost of Capital, Spanish Version Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Nextel Peru: Emerging Market Cost of Capital, Spanish Version | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nextel Peru: Emerging Market Cost of Capital, Spanish Version are -
Products dominated business model
– Even though Nextel Peru 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 - Nextel Peru: Emerging Market Cost of Capital, Spanish Version should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Nextel Peru: Emerging Market Cost of Capital, Spanish Version 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 Nextel Peru: Emerging Market Cost of Capital, Spanish Version can leverage the sales team experience to cultivate customer relationships as Nextel Peru is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Nextel Peru: Emerging Market Cost of Capital, Spanish Version, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
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 Nextel Peru supply chain. Even after few cautionary changes mentioned in the HBR case study - Nextel Peru: Emerging Market Cost of Capital, Spanish Version, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nextel Peru vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Nextel Peru, firm in the HBR case study Nextel Peru: Emerging Market Cost of Capital, Spanish Version needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Nextel Peru: Emerging Market Cost of Capital, Spanish Version, it seems that the employees of Nextel Peru 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.
High cash cycle compare to competitors
Nextel Peru 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Nextel Peru: Emerging Market Cost of Capital, Spanish Version, is just above the industry average. Nextel Peru 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 bargaining power of channel partners
– Because of the regulatory requirements, Luis M. Viceira, Joel L. Heilprin suggests that, Nextel Peru 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.
Skills based hiring
– The stress on hiring functional specialists at Nextel Peru 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Nextel Peru: Emerging Market Cost of Capital, Spanish Version 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 Nextel Peru has relatively successful track record of launching new products.
Opportunities Nextel Peru: Emerging Market Cost of Capital, Spanish Version | 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 Nextel Peru: Emerging Market Cost of Capital, Spanish Version are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nextel Peru can use these opportunities to build new business models that can help the communities that Nextel Peru operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Loyalty marketing
– Nextel Peru 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
– Nextel Peru 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 Nextel Peru: Emerging Market Cost of Capital, Spanish Version - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nextel Peru to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Nextel Peru to increase its market reach. Nextel Peru 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nextel Peru 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 Nextel Peru to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nextel Peru 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, Nextel Peru: Emerging Market Cost of Capital, Spanish Version, 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
– Nextel Peru 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Nextel Peru 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.
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 Nextel Peru in the consumer business. Now Nextel Peru can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Nextel Peru 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.
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. Nextel Peru 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. Nextel Peru 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.
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. Nextel Peru can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Nextel Peru can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Nextel Peru: Emerging Market Cost of Capital, Spanish Version 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.
Threats Nextel Peru: Emerging Market Cost of Capital, Spanish Version External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Nextel Peru: Emerging Market Cost of Capital, Spanish Version are -
Shortening product life cycle
– it is one of the major threat that Nextel Peru is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Nextel Peru: Emerging Market Cost of Capital, Spanish Version, Nextel Peru 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 .
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. Nextel Peru 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.
Stagnating economy with rate increase
– Nextel Peru 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.
Consumer confidence and its impact on Nextel Peru 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.
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. Nextel Peru 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.
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 Nextel Peru business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Nextel Peru 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.
Environmental challenges
– Nextel Peru 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. Nextel Peru can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Nextel Peru needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Nextel Peru 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.
Weighted SWOT Analysis of Nextel Peru: Emerging Market Cost of Capital, Spanish Version 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 Nextel Peru: Emerging Market Cost of Capital, Spanish Version 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 Nextel Peru: Emerging Market Cost of Capital, Spanish Version 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 Nextel Peru: Emerging Market Cost of Capital, Spanish Version 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 Nextel Peru: Emerging Market Cost of Capital, Spanish Version 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 Nextel Peru needs to make to build a sustainable competitive advantage.