"Golden Leash" Pay for Directors at The Dow Chemical Company SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of "Golden Leash" Pay for Directors at The Dow Chemical Company
In November 2014, The Dow Chemical Company was faced with the prospect of a proxy battle with prominent hedge fund and activist investor Third Point Management. The activist had criticized Dow's recent performance and advocated that the company split itself to maximize its potential. The activist also proposed two director candidates to join Dow's board. Third Point offered its director nominees what had come to be known as a "golden leash" incentive structure - a significant amount of incentive payment from the investor if the company performed well. Supporters and critics had weighed in on the pros and cons of such incentive schemes for corporate independent directors. Faced with the prospect of a proxy fight, Dow's board had to decide whether to invite the two directors on to the company's board knowing they came with the special payment scheme from the hedge fund.
Authors :: Ian D Gow, Suraj Srinivasan, Neeraj Goyal
Swot Analysis of ""Golden Leash" Pay for Directors at The Dow Chemical Company" written by Ian D Gow, Suraj Srinivasan, Neeraj Goyal includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Dow's Leash facing as an external strategic factors. Some of the topics covered in "Golden Leash" Pay for Directors at The Dow Chemical Company case study are - Strategic Management Strategies, Boards, Executive compensation, Financial management, Motivating people and Finance & Accounting.
Some of the macro environment factors that can be used to understand the "Golden Leash" Pay for Directors at The Dow Chemical Company casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, wage bills are increasing, there is backlash against globalization, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation,
competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of "Golden Leash" Pay for Directors at The Dow Chemical Company
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in "Golden Leash" Pay for Directors at The Dow Chemical Company case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dow's Leash, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dow's Leash 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 "Golden Leash" Pay for Directors at The Dow Chemical Company can be done for the following purposes –
1. Strategic planning using facts provided in "Golden Leash" Pay for Directors at The Dow Chemical Company case study
2. Improving business portfolio management of Dow's Leash
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 Dow's Leash
Strengths "Golden Leash" Pay for Directors at The Dow Chemical Company | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dow's Leash in "Golden Leash" Pay for Directors at The Dow Chemical Company Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Dow's Leash 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.
Successful track record of launching new products
– Dow's Leash has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dow's Leash 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.
Low bargaining power of suppliers
– Suppliers of Dow's Leash in the sector have low bargaining power. "Golden Leash" Pay for Directors at The Dow Chemical Company has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dow's Leash to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Dow's Leash
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Dow's Leash 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 Dow's Leash 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.
Highly skilled collaborators
– Dow's Leash 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 "Golden Leash" Pay for Directors at The Dow Chemical Company HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Dow's Leash is one of the leading recruiters in the industry. Managers in the "Golden Leash" Pay for Directors at The Dow Chemical Company are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Finance & Accounting field
– Dow's Leash 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 Dow's Leash in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Dow's Leash 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 Ian D Gow, Suraj Srinivasan, Neeraj Goyal 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.
Training and development
– Dow's Leash has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in "Golden Leash" Pay for Directors at The Dow Chemical Company 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.
Diverse revenue streams
– Dow's Leash is present in almost all the verticals within the industry. This has provided firm in "Golden Leash" Pay for Directors at The Dow Chemical Company 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
- Dow's Leash 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 Dow's Leash is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in "Golden Leash" Pay for Directors at The Dow Chemical Company Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses "Golden Leash" Pay for Directors at The Dow Chemical Company | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of "Golden Leash" Pay for Directors at The Dow Chemical Company are -
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 Dow's Leash supply chain. Even after few cautionary changes mentioned in the HBR case study - "Golden Leash" Pay for Directors at The Dow Chemical Company, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Dow's Leash vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Dow's Leash has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - "Golden Leash" Pay for Directors at The Dow Chemical Company should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Ian D Gow, Suraj Srinivasan, Neeraj Goyal suggests that, Dow's Leash is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to strategic competitive environment developments
– As "Golden Leash" Pay for Directors at The Dow Chemical Company HBR case study mentions - Dow's Leash 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study "Golden Leash" Pay for Directors at The Dow Chemical Company, is just above the industry average. Dow's Leash 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study "Golden Leash" Pay for Directors at The Dow Chemical Company, in the dynamic environment Dow's Leash has struggled to respond to the nimble upstart competition. Dow's Leash has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Dow's Leash 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.
Lack of clear differentiation of Dow's Leash products
– To increase the profitability and margins on the products, Dow's Leash needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Dow's Leash is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Dow's Leash needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Dow's Leash to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Dow's Leash 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Dow's Leash is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study "Golden Leash" Pay for Directors at The Dow Chemical Company 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 "Golden Leash" Pay for Directors at The Dow Chemical Company | 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 "Golden Leash" Pay for Directors at The Dow Chemical Company are -
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. Dow's Leash can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dow's Leash 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Dow's Leash can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Dow's Leash 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Dow's Leash 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 Dow's Leash to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Dow's Leash 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Dow's Leash can use these opportunities to build new business models that can help the communities that Dow's Leash operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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 Dow's Leash 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.
Creating value in data economy
– The success of analytics program of Dow's Leash has opened avenues for new revenue streams for the organization in the industry. This can help Dow's Leash to build a more holistic ecosystem as suggested in the "Golden Leash" Pay for Directors at The Dow Chemical Company case study. Dow's Leash can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Dow's Leash can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Dow's Leash 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.
Better consumer reach
– The expansion of the 5G network will help Dow's Leash to increase its market reach. Dow's Leash 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Dow's Leash is facing challenges because of the dominance of functional experts in the organization. "Golden Leash" Pay for Directors at The Dow Chemical Company 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 "Golden Leash" Pay for Directors at The Dow Chemical Company External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study "Golden Leash" Pay for Directors at The Dow Chemical Company are -
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.
Increasing wage structure of Dow's Leash
– 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 Dow's Leash.
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. Dow's Leash can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Dow's Leash 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.
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. Dow's Leash 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.
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 Dow's Leash in the Finance & Accounting sector and impact the bottomline of the organization.
Environmental challenges
– Dow's Leash 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. Dow's Leash can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Technology acceleration in Forth Industrial Revolution
– Dow's Leash has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Dow's Leash 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.
Shortening product life cycle
– it is one of the major threat that Dow's Leash is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Dow's Leash.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Dow's Leash with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study "Golden Leash" Pay for Directors at The Dow Chemical Company, Dow's Leash 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 .
Weighted SWOT Analysis of "Golden Leash" Pay for Directors at The Dow Chemical Company 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 "Golden Leash" Pay for Directors at The Dow Chemical Company 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 "Golden Leash" Pay for Directors at The Dow Chemical Company 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 "Golden Leash" Pay for Directors at The Dow Chemical Company 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 "Golden Leash" Pay for Directors at The Dow Chemical Company 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 Dow's Leash needs to make to build a sustainable competitive advantage.
