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 government debt because of Covid-19 spendings, increasing household debt because of falling income levels, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, geopolitical disruptions, cloud computing is disrupting traditional business models,
challanges to central banks by blockchain based private currencies, there is backlash against globalization, 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 -
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.
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.
High switching costs
– The high switching costs that Ambuja Cements 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.
Ability to recruit top talent
– Ambuja Cements is one of the leading recruiters in the industry. Managers in the Ambuja Cements and Holcim India Merger are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Ambuja Cements has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ambuja Cements to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Finance & Accounting field
– Ambuja Cements is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Ambuja Cements in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Organizational Resilience of Ambuja Cements
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ambuja Cements does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Analytics focus
– Ambuja Cements 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 Pitabas Mohanty, Tina Stephen, Supriti Mishra 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.
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.
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.
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 -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Ambuja Cements and Holcim India Merger HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Ambuja Cements has relatively successful track record of launching new products.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ambuja Cements is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Ambuja Cements and Holcim India Merger can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
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.
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 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Ambuja Cements and Holcim India Merger, it seems that the employees of Ambuja Cements don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Need for greater diversity
– Ambuja Cements 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.
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.
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 -
Developing new processes and practices
– Ambuja Cements 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ambuja Cements 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.
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.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Ambuja Cements to increase its market reach. Ambuja Cements 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.
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.
Loyalty marketing
– Ambuja Cements 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.
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ambuja Cements is facing challenges because of the dominance of functional experts in the organization. Ambuja Cements and Holcim India Merger 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 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 -
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.
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 Ambuja Cements.
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.
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.
High dependence on third party suppliers
– Ambuja Cements 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.
Shortening product life cycle
– it is one of the major threat that Ambuja Cements is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.
Increasing wage structure of Ambuja Cements
– 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 Ambuja Cements.
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.
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.
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.
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.
