Constructing an e-Supply Chain at Eastman Chemical Company SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Constructing an e-Supply Chain at Eastman Chemical Company
Craig Knight, Asia Pacific Digital Business and Customer Services Manager of Eastman Chemical Company, was given a mandate to sell Eastman's philosophy for an integrated electronic supply chain, otherwise known as the Integrated System Solution (ISS), to its business partners in the region, and to encourage adoption. Having invested in a state-of-the-art technical architecture that would support interconnectivity with all parties along the supply chain, Eastman was keen to realise the full benefits to be gained from an integrated e-supply chain on a global scale. Following numerous rounds of discussion with key business partners in the Asia Pacific region, some progress had been made. Nagase & Co., Ltd. of Japan had agreed to adopt ISS connections with Eastman, but had some reservations regarding the extent of integration. Although the benefits of integration were proven, suppliers, customers, distributors and other interested parties were faced with numerous limitations and considerations that would have significant implications on their established business processes and even the shaping of their corporate strategy. Adoption was not a simple choice. Craig understood these shortcomings and was making every effort to ease the adoption process by identifying the longer-term benefits to Nagase and other business partners of applying XML technology to their businesses.
Authors :: Benjamin Yen, Ali Farhoomand, Pauline Ng
Swot Analysis of "Constructing an e-Supply Chain at Eastman Chemical Company" written by Benjamin Yen, Ali Farhoomand, Pauline Ng includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Eastman Nagase facing as an external strategic factors. Some of the topics covered in Constructing an e-Supply Chain at Eastman Chemical Company case study are - Strategic Management Strategies, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Constructing an e-Supply Chain at Eastman Chemical Company casestudy better are - – technology disruption, geopolitical disruptions, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing,
customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Constructing an e-Supply Chain at Eastman Chemical Company
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Constructing an e-Supply Chain at Eastman Chemical Company case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Eastman Nagase, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Eastman Nagase 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 Constructing an e-Supply Chain at Eastman Chemical Company can be done for the following purposes –
1. Strategic planning using facts provided in Constructing an e-Supply Chain at Eastman Chemical Company case study
2. Improving business portfolio management of Eastman Nagase
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 Eastman Nagase
Strengths Constructing an e-Supply Chain at Eastman Chemical Company | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Eastman Nagase in Constructing an e-Supply Chain at Eastman Chemical Company Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Eastman Nagase in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Eastman Nagase has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Constructing an e-Supply Chain at Eastman Chemical Company 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 Constructing an e-Supply Chain at Eastman Chemical Company 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.
Sustainable margins compare to other players in Technology & Operations industry
– Constructing an e-Supply Chain at Eastman Chemical Company firm has clearly differentiated products in the market place. This has enabled Eastman Nagase to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Eastman Nagase to invest into research and development (R&D) and innovation.
Analytics focus
– Eastman Nagase 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 Benjamin Yen, Ali 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.
Learning organization
- Eastman Nagase 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 Eastman Nagase is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Constructing an e-Supply Chain at Eastman Chemical Company Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Eastman Nagase is one of the leading recruiters in the industry. Managers in the Constructing an e-Supply Chain at Eastman Chemical Company are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Eastman Nagase 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.
High brand equity
– Eastman Nagase has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Eastman Nagase to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Eastman Nagase in the sector have low bargaining power. Constructing an e-Supply Chain at Eastman Chemical Company has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Eastman Nagase to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Eastman Nagase has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Eastman Nagase 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.
Effective Research and Development (R&D)
– Eastman Nagase 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 Constructing an e-Supply Chain at Eastman Chemical Company - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Constructing an e-Supply Chain at Eastman Chemical Company | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Constructing an e-Supply Chain at Eastman Chemical Company are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Constructing an e-Supply Chain at Eastman Chemical Company, is just above the industry average. Eastman Nagase 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 Eastman Nagase is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Eastman Nagase needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Eastman Nagase to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Eastman Nagase 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 - Constructing an e-Supply Chain at Eastman Chemical Company should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Constructing an e-Supply Chain at Eastman Chemical Company, it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Skills based hiring
– The stress on hiring functional specialists at Eastman Nagase 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
Eastman Nagase 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.
Aligning sales with marketing
– It come across in the case study Constructing an e-Supply Chain at Eastman Chemical Company 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 Constructing an e-Supply Chain at Eastman Chemical Company can leverage the sales team experience to cultivate customer relationships as Eastman Nagase is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Eastman Nagase 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.
Slow decision making process
– As mentioned earlier in the report, Eastman Nagase 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. Eastman Nagase 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 bargaining power of channel partners
– Because of the regulatory requirements, Benjamin Yen, Ali Farhoomand, Pauline Ng suggests that, Eastman Nagase 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.
Interest costs
– Compare to the competition, Eastman Nagase 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.
Opportunities Constructing an e-Supply Chain at Eastman Chemical Company | 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 Constructing an e-Supply Chain at Eastman Chemical Company are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Eastman Nagase 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Eastman Nagase can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Eastman Nagase 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.
Using analytics as competitive advantage
– Eastman Nagase 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 Constructing an e-Supply Chain at Eastman Chemical Company - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Eastman Nagase to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Eastman Nagase can use these opportunities to build new business models that can help the communities that Eastman Nagase operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Creating value in data economy
– The success of analytics program of Eastman Nagase has opened avenues for new revenue streams for the organization in the industry. This can help Eastman Nagase to build a more holistic ecosystem as suggested in the Constructing an e-Supply Chain at Eastman Chemical Company case study. Eastman Nagase can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Eastman Nagase 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, Constructing an e-Supply Chain at Eastman Chemical Company, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Eastman Nagase can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Eastman Nagase 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.
Better consumer reach
– The expansion of the 5G network will help Eastman Nagase to increase its market reach. Eastman Nagase 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Eastman Nagase is facing challenges because of the dominance of functional experts in the organization. Constructing an e-Supply Chain at Eastman Chemical Company 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.
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. Eastman Nagase can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Eastman Nagase 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 Constructing an e-Supply Chain at Eastman Chemical Company External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Constructing an e-Supply Chain at Eastman Chemical Company are -
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Eastman Nagase 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.
Consumer confidence and its impact on Eastman Nagase 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Eastman Nagase with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Eastman Nagase 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.
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 Eastman Nagase.
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 Eastman Nagase in the Technology & Operations sector and impact the bottomline of the organization.
Increasing wage structure of Eastman Nagase
– 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 Eastman Nagase.
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. Eastman Nagase 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.
High dependence on third party suppliers
– Eastman Nagase 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Eastman Nagase 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 Constructing an e-Supply Chain at Eastman Chemical Company .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Constructing an e-Supply Chain at Eastman Chemical Company, Eastman Nagase 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 .
Weighted SWOT Analysis of Constructing an e-Supply Chain at Eastman Chemical Company 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 Constructing an e-Supply Chain at Eastman Chemical Company 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 Constructing an e-Supply Chain at Eastman Chemical Company 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 Constructing an e-Supply Chain at Eastman Chemical Company 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 Constructing an e-Supply Chain at Eastman Chemical Company 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 Eastman Nagase needs to make to build a sustainable competitive advantage.
