Premier Explosives: Finance for Organic Growth SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Premier Explosives: Finance for Organic Growth
In February 2015, Premier Explosives Limited (PEL) was preparing for a sudden expansion. The Indian company was the sixth-largest manufacturer of explosives in the country and also made defence products such as solid propellants and pyrogen igniters. PEL had many prominent customers in the mining industry and defence business, and exported bulk explosives to a number of countries. PEL signed a joint venture agreement with the well-regarded Kalyani Group, to manufacture additional defence products. To fund the expansion, PEL approached the Commercial Bank of India for a preferential allotment of equity shares to mobilize a‚¹510 million and an enhancement of working capital limits from a‚¹460 million to a‚¹740 million. The Central Bank of India's president of the investment banking group perused the proposal, but was presented with a dilemma due to the recent slowdown in the mining and infrastructure sectors -- the main industries that used PEL's products. Given the decline and the associated risks, should the banker reject the funding proposal for PEL to expand? Maram Srikanth is affiliated with Rajiv Gandhi Indian Institute of Management.
Swot Analysis of "Premier Explosives: Finance for Organic Growth" written by Maram Srikanth, Palanisamy Saravanan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pel Explosives facing as an external strategic factors. Some of the topics covered in Premier Explosives: Finance for Organic Growth case study are - Strategic Management Strategies, Entrepreneurship, Financial management, Manufacturing, Performance measurement, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Premier Explosives: Finance for Organic Growth casestudy better are - – wage bills are increasing, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, technology disruption, increasing commodity prices, there is backlash against globalization,
banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Premier Explosives: Finance for Organic Growth
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Premier Explosives: Finance for Organic Growth case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pel Explosives, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pel Explosives 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 Premier Explosives: Finance for Organic Growth can be done for the following purposes –
1. Strategic planning using facts provided in Premier Explosives: Finance for Organic Growth case study
2. Improving business portfolio management of Pel Explosives
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 Pel Explosives
Strengths Premier Explosives: Finance for Organic Growth | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pel Explosives in Premier Explosives: Finance for Organic Growth Harvard Business Review case study are -
Organizational Resilience of Pel Explosives
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pel Explosives does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Pel Explosives 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.
Diverse revenue streams
– Pel Explosives is present in almost all the verticals within the industry. This has provided firm in Premier Explosives: Finance for Organic Growth 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.
Learning organization
- Pel Explosives 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 Pel Explosives is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Premier Explosives: Finance for Organic Growth Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Pel Explosives digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pel Explosives 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.
Ability to lead change in Finance & Accounting field
– Pel Explosives 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 Pel Explosives in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Pel Explosives has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pel Explosives 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 Pel Explosives in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Pel Explosives is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Premier Explosives: Finance for Organic Growth 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.
Highly skilled collaborators
– Pel Explosives 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 Premier Explosives: Finance for Organic Growth HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Finance & Accounting industry
– Premier Explosives: Finance for Organic Growth firm has clearly differentiated products in the market place. This has enabled Pel Explosives to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Pel Explosives to invest into research and development (R&D) and innovation.
Weaknesses Premier Explosives: Finance for Organic Growth | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Premier Explosives: Finance for Organic Growth are -
Lack of clear differentiation of Pel Explosives products
– To increase the profitability and margins on the products, Pel Explosives 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 Premier Explosives: Finance for Organic Growth 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 Premier Explosives: Finance for Organic Growth can leverage the sales team experience to cultivate customer relationships as Pel Explosives is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Pel Explosives is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Pel Explosives needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pel Explosives to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Pel Explosives 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. Pel Explosives 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Premier Explosives: Finance for Organic Growth, in the dynamic environment Pel Explosives has struggled to respond to the nimble upstart competition. Pel Explosives has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Pel Explosives 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.
Slow to strategic competitive environment developments
– As Premier Explosives: Finance for Organic Growth HBR case study mentions - Pel Explosives 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Premier Explosives: Finance for Organic Growth 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 Pel Explosives 's lucrative customers.
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 Pel Explosives supply chain. Even after few cautionary changes mentioned in the HBR case study - Premier Explosives: Finance for Organic Growth, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pel Explosives vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Premier Explosives: Finance for Organic Growth, 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pel Explosives is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Premier Explosives: Finance for Organic Growth can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Premier Explosives: Finance for Organic Growth | 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 Premier Explosives: Finance for Organic Growth are -
Building a culture of innovation
– managers at Pel Explosives 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pel Explosives can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Using analytics as competitive advantage
– Pel Explosives 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 Premier Explosives: Finance for Organic Growth - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pel Explosives to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Pel Explosives in the consumer business. Now Pel Explosives 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 Pel Explosives 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 Pel Explosives to hire the very best people irrespective of their geographical location.
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 Pel Explosives 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.
Loyalty marketing
– Pel Explosives 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.
Creating value in data economy
– The success of analytics program of Pel Explosives has opened avenues for new revenue streams for the organization in the industry. This can help Pel Explosives to build a more holistic ecosystem as suggested in the Premier Explosives: Finance for Organic Growth case study. Pel Explosives can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pel Explosives 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, Premier Explosives: Finance for Organic Growth, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Pel Explosives 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.
Buying journey improvements
– Pel Explosives can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Premier Explosives: Finance for Organic Growth 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Pel Explosives can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Pel Explosives 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. Pel Explosives 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.
Threats Premier Explosives: Finance for Organic Growth External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Premier Explosives: Finance for Organic Growth 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.
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. Pel Explosives can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Pel Explosives.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Premier Explosives: Finance for Organic Growth, Pel Explosives 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 .
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 Pel Explosives business can come under increasing regulations regarding data privacy, data security, etc.
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. Pel Explosives needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Pel Explosives has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Pel Explosives 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pel Explosives with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Pel Explosives in the Finance & Accounting sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Pel Explosives is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Pel Explosives 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.
Increasing wage structure of Pel Explosives
– 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 Pel Explosives.
Weighted SWOT Analysis of Premier Explosives: Finance for Organic Growth 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 Premier Explosives: Finance for Organic Growth 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 Premier Explosives: Finance for Organic Growth 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 Premier Explosives: Finance for Organic Growth 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 Premier Explosives: Finance for Organic Growth 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 Pel Explosives needs to make to build a sustainable competitive advantage.