Case Study Description of E-Procurement at Cathay Pacific Airways: e-Business Valuation
At the end of 2001, Cathay Pacific's CXeBuy electronic procurement system was fully operational for its headquarters in Hong Kong. The 14-month implementation project aimed at applying Internet-based technology to build the most efficient purchasing process and capability in the industry. Although the project was far from complete, a member of the Project Steering Committee (PSC) queried the actual benefits realized so far as a result of e-procurement implementation. Robert Lamoureux, manager in charge of the e-procurement initiative, proposed to the PSC to formulate a methodology that user departments could apply at will to assess the impact of CXeBuy on their operations. However, some members of the committee raised concerns that such a voluntary approach would serve only a limited purpose and would fall short of providing department heads with an overview of the impact of CXeBuy on the overall corporate mission. Other PSC members were unsure of the need for such a valuation exercise at this early stage. Something had to be done to reinstate the need for accountability and support the premise that any Cathay Pacific e-business initiative had to prove its value.
Swot Analysis of "E-Procurement at Cathay Pacific Airways: e-Business Valuation" written by Ali F. Farhoomand, Pauline Ng includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cxebuy Psc facing as an external strategic factors. Some of the topics covered in E-Procurement at Cathay Pacific Airways: e-Business Valuation case study are - Strategic Management Strategies, and Technology & Operations.
Some of the macro environment factors that can be used to understand the E-Procurement at Cathay Pacific Airways: e-Business Valuation casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings,
cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of E-Procurement at Cathay Pacific Airways: e-Business Valuation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in E-Procurement at Cathay Pacific Airways: e-Business Valuation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cxebuy Psc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cxebuy Psc 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 E-Procurement at Cathay Pacific Airways: e-Business Valuation can be done for the following purposes –
1. Strategic planning using facts provided in E-Procurement at Cathay Pacific Airways: e-Business Valuation case study
2. Improving business portfolio management of Cxebuy Psc
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 Cxebuy Psc
Strengths E-Procurement at Cathay Pacific Airways: e-Business Valuation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cxebuy Psc in E-Procurement at Cathay Pacific Airways: e-Business Valuation Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Cxebuy Psc in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Cxebuy Psc is one of the most innovative firm in sector. Manager in E-Procurement at Cathay Pacific Airways: e-Business Valuation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Cxebuy Psc 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 Cxebuy Psc is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in E-Procurement at Cathay Pacific Airways: e-Business Valuation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Cxebuy Psc 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.
Highly skilled collaborators
– Cxebuy Psc 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 E-Procurement at Cathay Pacific Airways: e-Business Valuation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Cxebuy Psc is one of the leading recruiters in the industry. Managers in the E-Procurement at Cathay Pacific Airways: e-Business Valuation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Cxebuy Psc has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cxebuy Psc 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.
Low bargaining power of suppliers
– Suppliers of Cxebuy Psc in the sector have low bargaining power. E-Procurement at Cathay Pacific Airways: e-Business Valuation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cxebuy Psc to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Cxebuy Psc 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.
Operational resilience
– The operational resilience strategy in the E-Procurement at Cathay Pacific Airways: e-Business Valuation 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
– Cxebuy Psc has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cxebuy Psc to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Cxebuy Psc 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 Ali F. Farhoomand, Pauline Ng 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.
Weaknesses E-Procurement at Cathay Pacific Airways: e-Business Valuation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of E-Procurement at Cathay Pacific Airways: e-Business Valuation are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study E-Procurement at Cathay Pacific Airways: e-Business Valuation, is just above the industry average. Cxebuy Psc 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 strategic competitive environment developments
– As E-Procurement at Cathay Pacific Airways: e-Business Valuation HBR case study mentions - Cxebuy Psc 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Ali F. Farhoomand, Pauline Ng suggests that, Cxebuy Psc 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.
Capital Spending Reduction
– Even during the low interest decade, Cxebuy Psc 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.
Interest costs
– Compare to the competition, Cxebuy Psc has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cxebuy Psc is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study E-Procurement at Cathay Pacific Airways: e-Business Valuation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Cxebuy Psc 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 cash cycle compare to competitors
Cxebuy Psc 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.
Slow decision making process
– As mentioned earlier in the report, Cxebuy Psc 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. Cxebuy Psc 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.
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 Cxebuy Psc supply chain. Even after few cautionary changes mentioned in the HBR case study - E-Procurement at Cathay Pacific Airways: e-Business Valuation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cxebuy Psc vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study E-Procurement at Cathay Pacific Airways: e-Business Valuation 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 E-Procurement at Cathay Pacific Airways: e-Business Valuation can leverage the sales team experience to cultivate customer relationships as Cxebuy Psc is planning to shift buying processes online.
Opportunities E-Procurement at Cathay Pacific Airways: e-Business Valuation | 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 E-Procurement at Cathay Pacific Airways: e-Business Valuation are -
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. Cxebuy Psc can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cxebuy Psc 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 Cxebuy Psc to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cxebuy Psc 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.
Buying journey improvements
– Cxebuy Psc can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. E-Procurement at Cathay Pacific Airways: e-Business Valuation 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.
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. Cxebuy Psc 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. Cxebuy Psc 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cxebuy Psc can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cxebuy Psc 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, E-Procurement at Cathay Pacific Airways: e-Business Valuation, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Cxebuy Psc 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.
Developing new processes and practices
– Cxebuy Psc 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.
Learning at scale
– Online learning technologies has now opened space for Cxebuy Psc 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cxebuy Psc is facing challenges because of the dominance of functional experts in the organization. E-Procurement at Cathay Pacific Airways: e-Business Valuation 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 Cxebuy Psc 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.
Building a culture of innovation
– managers at Cxebuy Psc 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 Technology & Operations segment.
Threats E-Procurement at Cathay Pacific Airways: e-Business Valuation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study E-Procurement at Cathay Pacific Airways: e-Business Valuation are -
Consumer confidence and its impact on Cxebuy Psc 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.
Increasing wage structure of Cxebuy Psc
– 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 Cxebuy Psc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study E-Procurement at Cathay Pacific Airways: e-Business Valuation, Cxebuy Psc may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Technology acceleration in Forth Industrial Revolution
– Cxebuy Psc has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Cxebuy Psc 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.
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.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cxebuy Psc can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Cxebuy Psc 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 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. Cxebuy Psc needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cxebuy Psc 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
– Cxebuy Psc 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 Cxebuy Psc 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 Cxebuy Psc 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.
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 Cxebuy Psc.
Weighted SWOT Analysis of E-Procurement at Cathay Pacific Airways: e-Business Valuation 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 E-Procurement at Cathay Pacific Airways: e-Business Valuation 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 E-Procurement at Cathay Pacific Airways: e-Business Valuation 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 E-Procurement at Cathay Pacific Airways: e-Business Valuation 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 E-Procurement at Cathay Pacific Airways: e-Business Valuation 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 Cxebuy Psc needs to make to build a sustainable competitive advantage.