Case Study Description of Jumbo Group: Initial Public Offering
Jumbo Group Ltd. (Jumbo) was among Singapore's leading food and beverage establishments. Founded in 1987, the group consisted of eight brands and operated 16 outlets-14 in Singapore and two in China. On October 28, 2015, Jumbo announced its initial public offering (IPO) of SG$22.06 million, consisting of two million retail shares and 86.23 million placement shares at SG$0.25 each. In this highly competitive market, the company's chief executive officer and chairman was motivated to list Jumbo so it would have a bigger platform and better exposure to grow faster. He hoped a softer IPO market would attract more long-term investors. Jumbo was clearly profitable, but based on its past financial performance, what would be a reasonable valuation for each of its shares? The case covers valuation using the discounted cash flow model, weighted average cost of capital, discounted dividend model, and relative valuation, as well as the computation of underpricing. Ruth S.K. Tan is affiliated with National University of Singapore. Zsuzsa R. Huszar is affiliated with National University of Singapore. Weina Zhang is affiliated with National University of Singapore.
Authors :: Ruth S.K. Tan, Zsuzsa R. Huszar, Weina Zhang
Swot Analysis of "Jumbo Group: Initial Public Offering" written by Ruth S.K. Tan, Zsuzsa R. Huszar, Weina Zhang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Jumbo Singapore facing as an external strategic factors. Some of the topics covered in Jumbo Group: Initial Public Offering case study are - Strategic Management Strategies, Financial analysis, Financial management, IPO and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Jumbo Group: Initial Public Offering casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, increasing energy prices, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, etc
Introduction to SWOT Analysis of Jumbo Group: Initial Public Offering
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Jumbo Group: Initial Public Offering case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Jumbo Singapore, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Jumbo Singapore 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 Jumbo Group: Initial Public Offering can be done for the following purposes –
1. Strategic planning using facts provided in Jumbo Group: Initial Public Offering case study
2. Improving business portfolio management of Jumbo Singapore
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 Jumbo Singapore
Strengths Jumbo Group: Initial Public Offering | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Jumbo Singapore in Jumbo Group: Initial Public Offering Harvard Business Review case study are -
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Jumbo Singapore digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Jumbo Singapore 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.
Training and development
– Jumbo Singapore has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Jumbo Group: Initial Public Offering 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.
Operational resilience
– The operational resilience strategy in the Jumbo Group: Initial Public Offering 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.
Effective Research and Development (R&D)
– Jumbo Singapore 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 Jumbo Group: Initial Public Offering - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Jumbo Singapore 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 Jumbo Singapore is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Jumbo Group: Initial Public Offering Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Jumbo Singapore 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.
Innovation driven organization
– Jumbo Singapore is one of the most innovative firm in sector. Manager in Jumbo Group: Initial Public Offering Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Jumbo Singapore in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Jumbo Singapore 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, Zsuzsa R. Huszar, Weina Zhang 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.
High switching costs
– The high switching costs that Jumbo Singapore 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.
Ability to recruit top talent
– Jumbo Singapore is one of the leading recruiters in the industry. Managers in the Jumbo Group: Initial Public Offering are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Jumbo Singapore is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Jumbo Group: Initial Public Offering | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Jumbo Group: Initial Public Offering are -
Increasing silos among functional specialists
– The organizational structure of Jumbo Singapore is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Jumbo Singapore needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Jumbo Singapore to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Jumbo Singapore 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Jumbo Group: Initial Public Offering, it seems that the employees of Jumbo Singapore 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 operating costs
– Compare to the competitors, firm in the HBR case study Jumbo Group: Initial Public Offering 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 Jumbo Singapore 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Jumbo Singapore 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.
Products dominated business model
– Even though Jumbo Singapore 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 - Jumbo Group: Initial Public Offering should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Jumbo Singapore 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 Jumbo Group: Initial Public Offering, is just above the industry average. Jumbo Singapore 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Jumbo Singapore is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Jumbo Group: Initial Public Offering 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 Jumbo Group: Initial Public Offering 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 Jumbo Singapore has relatively successful track record of launching new products.
Lack of clear differentiation of Jumbo Singapore products
– To increase the profitability and margins on the products, Jumbo Singapore needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Jumbo Group: Initial Public Offering | 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 Jumbo Group: Initial Public Offering are -
Creating value in data economy
– The success of analytics program of Jumbo Singapore has opened avenues for new revenue streams for the organization in the industry. This can help Jumbo Singapore to build a more holistic ecosystem as suggested in the Jumbo Group: Initial Public Offering case study. Jumbo Singapore can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Jumbo Singapore 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Jumbo Singapore is facing challenges because of the dominance of functional experts in the organization. Jumbo Group: Initial Public Offering 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.
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 Jumbo Singapore in the consumer business. Now Jumbo Singapore can target international markets with far fewer capital restrictions requirements than the existing system.
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. Jumbo Singapore can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Jumbo Singapore 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.
Leveraging digital technologies
– Jumbo Singapore 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.
Building a culture of innovation
– managers at Jumbo Singapore can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Jumbo Singapore can use these opportunities to build new business models that can help the communities that Jumbo Singapore operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Developing new processes and practices
– Jumbo Singapore 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.
Using analytics as competitive advantage
– Jumbo Singapore 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 Jumbo Group: Initial Public Offering - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Jumbo Singapore to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Jumbo Singapore 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.
Buying journey improvements
– Jumbo Singapore can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Jumbo Group: Initial Public Offering 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 Jumbo Group: Initial Public Offering External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Jumbo Group: Initial Public Offering are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Jumbo Singapore 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 Jumbo Group: Initial Public Offering .
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 Jumbo Singapore business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Jumbo Singapore in the Finance & Accounting industry. The Finance & Accounting 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.
Increasing wage structure of Jumbo Singapore
– 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 Jumbo Singapore.
Stagnating economy with rate increase
– Jumbo Singapore 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
– Jumbo Singapore 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.
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 Jumbo Singapore.
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. Jumbo Singapore 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.
Regulatory challenges
– Jumbo Singapore 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.
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 Jumbo Singapore in the Finance & Accounting sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Jumbo Singapore has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Jumbo Singapore needs to keep up with the evolution of technology in the Finance & Accounting 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.
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 Jumbo Group: Initial Public Offering, Jumbo Singapore 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 .
Weighted SWOT Analysis of Jumbo Group: Initial Public Offering 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 Jumbo Group: Initial Public Offering 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 Jumbo Group: Initial Public Offering 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 Jumbo Group: Initial Public Offering 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 Jumbo Group: Initial Public Offering 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 Jumbo Singapore needs to make to build a sustainable competitive advantage.