Amtek Auto Ltd.: From Acquisitions to a Financial Crisis SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
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Case Study SWOT Analysis Solution
Case Study Description of Amtek Auto Ltd.: From Acquisitions to a Financial Crisis
In the summer of 2015, India-based Amtek Auto Ltd., one of the country's largest companies in the manufacturing of automotive components, was on the brink of financial ruin. After more than a decade of being immersed in a spending spree on acquisitions to build capacity and expand its clientA¨le in both the European and Asian auto markets, Amtek's stock plummeted by 50 per cent within two days as nervous investors worried about the company's ability to make its scheduled debt payments. Tensions were high as the company faced mounting pressure over its liquidity issues, and after reporting a net loss for the first time in two decades. With rumours of bankruptcy on the horizon, what steps could the company take to decrease its debt burden at a time when the automotive industry was in a slump? Should Amtek consider selling off some of its assets to raise the needed cash, or should it look to banks and investors? Gaurav Singh Chauhan is affiliated with Indian Institute of Management Indore. Gunjan Tomer is affiliated with Institute for Financial Management and Research.
Swot Analysis of "Amtek Auto Ltd.: From Acquisitions to a Financial Crisis" written by Gaurav Singh Chauhan, Gunjan Tomer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Amtek Auto facing as an external strategic factors. Some of the topics covered in Amtek Auto Ltd.: From Acquisitions to a Financial Crisis case study are - Strategic Management Strategies, Financial management, Manufacturing and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Amtek Auto Ltd.: From Acquisitions to a Financial Crisis casestudy better are - – supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion,
increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Amtek Auto Ltd.: From Acquisitions to a Financial Crisis
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Amtek Auto Ltd.: From Acquisitions to a Financial Crisis case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Amtek Auto, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Amtek Auto 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 Amtek Auto Ltd.: From Acquisitions to a Financial Crisis can be done for the following purposes –
1. Strategic planning using facts provided in Amtek Auto Ltd.: From Acquisitions to a Financial Crisis case study
2. Improving business portfolio management of Amtek Auto
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 Amtek Auto
Strengths Amtek Auto Ltd.: From Acquisitions to a Financial Crisis | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Amtek Auto in Amtek Auto Ltd.: From Acquisitions to a Financial Crisis Harvard Business Review case study are -
Training and development
– Amtek Auto has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Amtek Auto Ltd.: From Acquisitions to a Financial Crisis 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.
Analytics focus
– Amtek Auto 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 Gaurav Singh Chauhan, Gunjan Tomer 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.
Operational resilience
– The operational resilience strategy in the Amtek Auto Ltd.: From Acquisitions to a Financial Crisis 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.
Superior customer experience
– The customer experience strategy of Amtek Auto in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Amtek Auto has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Amtek Auto 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Amtek Auto Ltd.: From Acquisitions to a Financial Crisis firm has clearly differentiated products in the market place. This has enabled Amtek Auto to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Amtek Auto to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Amtek Auto is present in almost all the verticals within the industry. This has provided firm in Amtek Auto Ltd.: From Acquisitions to a Financial Crisis case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Highly skilled collaborators
– Amtek Auto 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 Amtek Auto Ltd.: From Acquisitions to a Financial Crisis HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Amtek Auto is one of the leading recruiters in the industry. Managers in the Amtek Auto Ltd.: From Acquisitions to a Financial Crisis are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Amtek Auto 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 Amtek Auto is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Amtek Auto Ltd.: From Acquisitions to a Financial Crisis Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Amtek Auto 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.
Cross disciplinary teams
– Horizontal connected teams at the Amtek Auto 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.
Weaknesses Amtek Auto Ltd.: From Acquisitions to a Financial Crisis | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Amtek Auto Ltd.: From Acquisitions to a Financial Crisis are -
No frontier risks strategy
– After analyzing the HBR case study Amtek Auto Ltd.: From Acquisitions to a Financial Crisis, 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.
Increasing silos among functional specialists
– The organizational structure of Amtek Auto is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Amtek Auto needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Amtek Auto to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study Amtek Auto Ltd.: From Acquisitions to a Financial Crisis 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 Amtek Auto Ltd.: From Acquisitions to a Financial Crisis can leverage the sales team experience to cultivate customer relationships as Amtek Auto is planning to shift buying processes online.
High cash cycle compare to competitors
Amtek Auto 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Amtek Auto 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.
Interest costs
– Compare to the competition, Amtek Auto 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.
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 Amtek Auto supply chain. Even after few cautionary changes mentioned in the HBR case study - Amtek Auto Ltd.: From Acquisitions to a Financial Crisis, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Amtek Auto vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Amtek Auto 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. Amtek Auto 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Amtek Auto Ltd.: From Acquisitions to a Financial Crisis, is just above the industry average. Amtek Auto 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.
Low market penetration in new markets
– Outside its home market of Amtek Auto, firm in the HBR case study Amtek Auto Ltd.: From Acquisitions to a Financial Crisis needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Amtek Auto 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.
Opportunities Amtek Auto Ltd.: From Acquisitions to a Financial Crisis | 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 Amtek Auto Ltd.: From Acquisitions to a Financial Crisis are -
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 Amtek Auto in the consumer business. Now Amtek Auto can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Amtek Auto 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 Amtek Auto to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Amtek Auto can use these opportunities to build new business models that can help the communities that Amtek Auto operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Creating value in data economy
– The success of analytics program of Amtek Auto has opened avenues for new revenue streams for the organization in the industry. This can help Amtek Auto to build a more holistic ecosystem as suggested in the Amtek Auto Ltd.: From Acquisitions to a Financial Crisis case study. Amtek Auto can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Amtek Auto can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Amtek Auto Ltd.: From Acquisitions to a Financial Crisis 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.
Manufacturing automation
– Amtek Auto can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Amtek Auto 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Amtek Auto 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.
Learning at scale
– Online learning technologies has now opened space for Amtek Auto 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.
Loyalty marketing
– Amtek Auto has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Using analytics as competitive advantage
– Amtek Auto 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 Amtek Auto Ltd.: From Acquisitions to a Financial Crisis - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Amtek Auto 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 Amtek Auto to increase its market reach. Amtek Auto 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Amtek Auto can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Amtek Auto Ltd.: From Acquisitions to a Financial Crisis External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Amtek Auto Ltd.: From Acquisitions to a Financial Crisis are -
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 Amtek Auto in the Finance & Accounting sector and impact the bottomline 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. Amtek Auto needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Amtek Auto.
Stagnating economy with rate increase
– Amtek Auto 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Amtek Auto 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 Amtek Auto Ltd.: From Acquisitions to a Financial Crisis .
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. Amtek Auto 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 Amtek Auto with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Environmental challenges
– Amtek Auto 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. Amtek Auto 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 Amtek Auto 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.
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.
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. Amtek Auto 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.
Technology acceleration in Forth Industrial Revolution
– Amtek Auto has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Amtek Auto 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.
Weighted SWOT Analysis of Amtek Auto Ltd.: From Acquisitions to a Financial Crisis 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 Amtek Auto Ltd.: From Acquisitions to a Financial Crisis 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 Amtek Auto Ltd.: From Acquisitions to a Financial Crisis 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 Amtek Auto Ltd.: From Acquisitions to a Financial Crisis 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 Amtek Auto Ltd.: From Acquisitions to a Financial Crisis 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 Amtek Auto needs to make to build a sustainable competitive advantage.
