Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A)
Essar Group (Essar), a large diversified conglomerate based in India, needs to raise significant capital through an initial public offering (IPO) and has to decide whether to do so through the Indian Stock Exchange, the London Stock Exchange or the New York Stock Exchange. The company will have to continue to report in Indian GAAP and, if it decides to list its IPO in the United States or Europe, it also will have to adopt either U.S. GAAP or IFRS. The chief financial officer of Essar has to recommend to management where to raise the needed capital and what accounting standard to adopt. The B case 9B13B015 discloses the decision and describes some of the implementation issues.
Authors :: David J. Sharp, Sudershan Kuntluru, Paritosh Basu, Sanjay Chauhan
Swot Analysis of "Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A)" written by David J. Sharp, Sudershan Kuntluru, Paritosh Basu, Sanjay Chauhan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Essar Gaap facing as an external strategic factors. Some of the topics covered in Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) casestudy better are - – supply chains are disrupted by pandemic , geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, increasing energy prices, technology disruption, increasing government debt because of Covid-19 spendings,
competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Essar Gaap, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Essar Gaap 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) can be done for the following purposes –
1. Strategic planning using facts provided in Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) case study
2. Improving business portfolio management of Essar Gaap
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 Essar Gaap
Strengths Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Essar Gaap in Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) Harvard Business Review case study are -
Strong track record of project management
– Essar Gaap is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Essar Gaap has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Essar Gaap 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.
Analytics focus
– Essar Gaap 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 David J. Sharp, Sudershan Kuntluru, Paritosh Basu, Sanjay Chauhan can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Essar Gaap in the sector have low bargaining power. Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Essar Gaap to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Essar Gaap 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 Essar Gaap is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Essar Gaap 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) 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
– Essar Gaap has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Essar Gaap to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Essar Gaap digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Essar Gaap 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.
High switching costs
– The high switching costs that Essar Gaap 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) firm has clearly differentiated products in the market place. This has enabled Essar Gaap to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Essar Gaap to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Essar Gaap 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A), is just above the industry average. Essar Gaap 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 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 Essar Gaap supply chain. Even after few cautionary changes mentioned in the HBR case study - Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Essar Gaap vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Essar Gaap 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Essar Gaap is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Essar Gaap 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.
Aligning sales with marketing
– It come across in the case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) can leverage the sales team experience to cultivate customer relationships as Essar Gaap is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Essar Gaap 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.
No frontier risks strategy
– After analyzing the HBR case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A), 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.
Slow to strategic competitive environment developments
– As Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) HBR case study mentions - Essar Gaap 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.
Slow decision making process
– As mentioned earlier in the report, Essar Gaap 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. Essar Gaap 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.
Need for greater diversity
– Essar Gaap has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) | 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Essar Gaap 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 Essar Gaap to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Essar Gaap 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.
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. Essar Gaap can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Essar Gaap can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Essar Gaap 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.
Building a culture of innovation
– managers at Essar Gaap 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.
Using analytics as competitive advantage
– Essar Gaap 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Essar Gaap 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 Essar Gaap to increase its market reach. Essar Gaap 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.
Learning at scale
– Online learning technologies has now opened space for Essar Gaap 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.
Developing new processes and practices
– Essar Gaap 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.
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. Essar Gaap 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. Essar Gaap 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.
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 Essar Gaap in the consumer business. Now Essar Gaap can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Essar Gaap is facing challenges because of the dominance of functional experts in the organization. Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) 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.
Threats Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) are -
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Essar Gaap 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) .
Consumer confidence and its impact on Essar Gaap 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.
Shortening product life cycle
– it is one of the major threat that Essar Gaap is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Essar Gaap.
Increasing wage structure of Essar Gaap
– 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 Essar Gaap.
High dependence on third party suppliers
– Essar Gaap 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.
Environmental challenges
– Essar Gaap 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. Essar Gaap can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Essar Gaap 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.
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. Essar Gaap can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Essar Gaap with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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. Essar Gaap needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) 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 Essar Gaap needs to make to build a sustainable competitive advantage.