Ambuja Cements and Holcim India Merger SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Ambuja Cements and Holcim India Merger
On July 24, 2013, the management of Ambuja Cements Limited announced the merger of Holcim (India) Private Limited with Ambuja Cements in a two-stage process. First, Ambuja Cements would buy a 24 per cent stake of Holcim (India) from Holderind Investments Ltd. of Mauritius for a‚¹35 billion. Subsequently, Holcim (India) would be merged with Ambuja Cements. The management of Ambuja Cements projected huge synergy from the merger, whereas proxy firm advisors called it corporate misgovernance. The case gives students an opportunity to analyze this two-step transaction to determine whether it compromised the interests of minority shareholders. The case also presents an opportunity to estimate the marginal impact of the transfer of cash and the cancellation of shares on the stock price of the acquiring company. Pitabas Mohanty and Tina Stephen are affiliated with XLRI-Xavier School of Management. Supriti Mishra is affiliated with International Management Institute-Bhubaneswar.
Authors :: Pitabas Mohanty, Tina Stephen, Supriti Mishra
Swot Analysis of "Ambuja Cements and Holcim India Merger" written by Pitabas Mohanty, Tina Stephen, Supriti Mishra includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ambuja Cements facing as an external strategic factors. Some of the topics covered in Ambuja Cements and Holcim India Merger case study are - Strategic Management Strategies, Manufacturing, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Ambuja Cements and Holcim India Merger casestudy better are - – increasing transportation and logistics costs, cloud computing is disrupting traditional business models, increasing energy prices, increasing household debt because of falling income levels, geopolitical disruptions, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic ,
increasing government debt because of Covid-19 spendings, technology disruption, etc
Introduction to SWOT Analysis of Ambuja Cements and Holcim India Merger
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ambuja Cements and Holcim India Merger case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ambuja Cements, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ambuja Cements 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 Ambuja Cements and Holcim India Merger can be done for the following purposes –
1. Strategic planning using facts provided in Ambuja Cements and Holcim India Merger case study
2. Improving business portfolio management of Ambuja Cements
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 Ambuja Cements
Strengths Ambuja Cements and Holcim India Merger | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ambuja Cements in Ambuja Cements and Holcim India Merger Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Ambuja Cements in the sector have low bargaining power. Ambuja Cements and Holcim India Merger has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ambuja Cements to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Ambuja Cements 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 Ambuja Cements and Holcim India Merger HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Ambuja Cements is present in almost all the verticals within the industry. This has provided firm in Ambuja Cements and Holcim India Merger 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.
Successful track record of launching new products
– Ambuja Cements has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ambuja Cements 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.
Superior customer experience
– The customer experience strategy of Ambuja Cements in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Ambuja Cements 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 Ambuja Cements is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Ambuja Cements and Holcim India Merger Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Ambuja Cements is one of the most innovative firm in sector. Manager in Ambuja Cements and Holcim India Merger Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Ambuja Cements digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ambuja Cements 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Ambuja Cements and Holcim India Merger firm has clearly differentiated products in the market place. This has enabled Ambuja Cements to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Ambuja Cements to invest into research and development (R&D) and innovation.
Strong track record of project management
– Ambuja Cements is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Ambuja Cements 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 Ambuja Cements and Holcim India Merger - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Ambuja Cements and Holcim India Merger 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.
Weaknesses Ambuja Cements and Holcim India Merger | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ambuja Cements and Holcim India Merger are -
Slow decision making process
– As mentioned earlier in the report, Ambuja Cements 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. Ambuja Cements 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.
Lack of clear differentiation of Ambuja Cements products
– To increase the profitability and margins on the products, Ambuja Cements needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Ambuja Cements and Holcim India Merger 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 Ambuja Cements and Holcim India Merger can leverage the sales team experience to cultivate customer relationships as Ambuja Cements is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Ambuja Cements and Holcim India Merger, is just above the industry average. Ambuja Cements 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 operating costs
– Compare to the competitors, firm in the HBR case study Ambuja Cements and Holcim India Merger has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Ambuja Cements 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Ambuja Cements 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.
High cash cycle compare to competitors
Ambuja Cements 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.
Increasing silos among functional specialists
– The organizational structure of Ambuja Cements is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Ambuja Cements needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ambuja Cements to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Ambuja Cements and Holcim India Merger HBR case study mentions - Ambuja Cements 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.
Skills based hiring
– The stress on hiring functional specialists at Ambuja Cements 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.
No frontier risks strategy
– After analyzing the HBR case study Ambuja Cements and Holcim India Merger, 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.
Opportunities Ambuja Cements and Holcim India Merger | 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 Ambuja Cements and Holcim India Merger are -
Using analytics as competitive advantage
– Ambuja Cements 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 Ambuja Cements and Holcim India Merger - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ambuja Cements to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ambuja Cements can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Ambuja Cements can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ambuja Cements and Holcim India Merger 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ambuja Cements 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 Ambuja Cements to hire the very best people irrespective of their geographical location.
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. Ambuja Cements 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. Ambuja Cements 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.
Building a culture of innovation
– managers at Ambuja Cements 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.
Leveraging digital technologies
– Ambuja Cements 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ambuja Cements can use these opportunities to build new business models that can help the communities that Ambuja Cements operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Manufacturing automation
– Ambuja Cements 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.
Creating value in data economy
– The success of analytics program of Ambuja Cements has opened avenues for new revenue streams for the organization in the industry. This can help Ambuja Cements to build a more holistic ecosystem as suggested in the Ambuja Cements and Holcim India Merger case study. Ambuja Cements can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Ambuja Cements to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ambuja Cements 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ambuja Cements 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, Ambuja Cements and Holcim India Merger, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Ambuja Cements and Holcim India Merger External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ambuja Cements and Holcim India Merger 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 Ambuja Cements 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. Ambuja Cements needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ambuja Cements 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 acceleration in Forth Industrial Revolution
– Ambuja Cements has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Ambuja Cements needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Consumer confidence and its impact on Ambuja Cements 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.
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 Ambuja Cements business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Ambuja Cements and Holcim India Merger, Ambuja Cements may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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. Ambuja Cements can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Ambuja Cements 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ambuja Cements with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Ambuja Cements 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, Ambuja Cements 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 Ambuja Cements and Holcim India Merger .
Weighted SWOT Analysis of Ambuja Cements and Holcim India Merger 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 Ambuja Cements and Holcim India Merger 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 Ambuja Cements and Holcim India Merger 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 Ambuja Cements and Holcim India Merger 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 Ambuja Cements and Holcim India Merger 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 Ambuja Cements needs to make to build a sustainable competitive advantage.