Canadian Pacific's Bid for Norfolk Southern SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
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Case Study SWOT Analysis Solution
Case Study Description of Canadian Pacific's Bid for Norfolk Southern
In December 2015, Canadian Pacific Railroad (CPR) has just made its third bid to acquire Norfolk Southern Corporation (NSC), one of the largest railroads in the United States. Having rejected the prior offers, NSC's CEO James Squires and the NSC board must now value the current offer including the projected merger synergies as well as a recently-added contingent value right (CVR) designed to "sweeten" the offer, and decide how to respond.
Swot Analysis of "Canadian Pacific's Bid for Norfolk Southern" written by Benjamin C. Esty, E. Scott Mayfield includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nsc Norfolk facing as an external strategic factors. Some of the topics covered in Canadian Pacific's Bid for Norfolk Southern case study are - Strategic Management Strategies, Change management, Costs, Mergers & acquisitions, Negotiations and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Canadian Pacific's Bid for Norfolk Southern casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, geopolitical disruptions, central banks are concerned over increasing inflation, increasing transportation and logistics costs,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Canadian Pacific's Bid for Norfolk Southern
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Canadian Pacific's Bid for Norfolk Southern case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nsc Norfolk, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nsc Norfolk 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 Canadian Pacific's Bid for Norfolk Southern can be done for the following purposes –
1. Strategic planning using facts provided in Canadian Pacific's Bid for Norfolk Southern case study
2. Improving business portfolio management of Nsc Norfolk
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 Nsc Norfolk
Strengths Canadian Pacific's Bid for Norfolk Southern | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nsc Norfolk in Canadian Pacific's Bid for Norfolk Southern Harvard Business Review case study are -
Sustainable margins compare to other players in Finance & Accounting industry
– Canadian Pacific's Bid for Norfolk Southern firm has clearly differentiated products in the market place. This has enabled Nsc Norfolk to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Nsc Norfolk to invest into research and development (R&D) and innovation.
Training and development
– Nsc Norfolk has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Canadian Pacific's Bid for Norfolk Southern 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.
Operational resilience
– The operational resilience strategy in the Canadian Pacific's Bid for Norfolk Southern 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.
Low bargaining power of suppliers
– Suppliers of Nsc Norfolk in the sector have low bargaining power. Canadian Pacific's Bid for Norfolk Southern has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nsc Norfolk to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Nsc Norfolk has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Nsc Norfolk to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Nsc Norfolk 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 Nsc Norfolk is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Canadian Pacific's Bid for Norfolk Southern Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Nsc Norfolk
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Nsc Norfolk does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Nsc Norfolk is one of the most innovative firm in sector. Manager in Canadian Pacific's Bid for Norfolk Southern Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Nsc Norfolk 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 Benjamin C. Esty, E. Scott Mayfield 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.
Cross disciplinary teams
– Horizontal connected teams at the Nsc Norfolk 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.
Superior customer experience
– The customer experience strategy of Nsc Norfolk in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Nsc Norfolk is present in almost all the verticals within the industry. This has provided firm in Canadian Pacific's Bid for Norfolk Southern 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.
Weaknesses Canadian Pacific's Bid for Norfolk Southern | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Canadian Pacific's Bid for Norfolk Southern 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 Nsc Norfolk supply chain. Even after few cautionary changes mentioned in the HBR case study - Canadian Pacific's Bid for Norfolk Southern, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nsc Norfolk vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Canadian Pacific's Bid for Norfolk Southern 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 Nsc Norfolk 's lucrative customers.
Lack of clear differentiation of Nsc Norfolk products
– To increase the profitability and margins on the products, Nsc Norfolk needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Canadian Pacific's Bid for Norfolk Southern HBR case study mentions - Nsc Norfolk 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.
Interest costs
– Compare to the competition, Nsc Norfolk 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.
Products dominated business model
– Even though Nsc Norfolk 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 - Canadian Pacific's Bid for Norfolk Southern should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Canadian Pacific's Bid for Norfolk Southern, is just above the industry average. Nsc Norfolk 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 Canadian Pacific's Bid for Norfolk Southern, in the dynamic environment Nsc Norfolk has struggled to respond to the nimble upstart competition. Nsc Norfolk has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Nsc Norfolk 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. Nsc Norfolk 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.
Increasing silos among functional specialists
– The organizational structure of Nsc Norfolk is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Nsc Norfolk needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nsc Norfolk to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Nsc Norfolk has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Canadian Pacific's Bid for Norfolk Southern | 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 Canadian Pacific's Bid for Norfolk Southern are -
Leveraging digital technologies
– Nsc Norfolk 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.
Using analytics as competitive advantage
– Nsc Norfolk 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 Canadian Pacific's Bid for Norfolk Southern - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nsc Norfolk to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nsc Norfolk can use these opportunities to build new business models that can help the communities that Nsc Norfolk operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Nsc Norfolk can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Nsc Norfolk 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Nsc Norfolk is facing challenges because of the dominance of functional experts in the organization. Canadian Pacific's Bid for Norfolk Southern 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.
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 Nsc Norfolk 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.
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. Nsc Norfolk 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. Nsc Norfolk 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.
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. Nsc Norfolk can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Nsc Norfolk in the consumer business. Now Nsc Norfolk can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Nsc Norfolk can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Nsc Norfolk 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.
Learning at scale
– Online learning technologies has now opened space for Nsc Norfolk to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Canadian Pacific's Bid for Norfolk Southern External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Canadian Pacific's Bid for Norfolk Southern are -
Consumer confidence and its impact on Nsc Norfolk 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Canadian Pacific's Bid for Norfolk Southern, Nsc Norfolk 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 Nsc Norfolk business can come under increasing regulations regarding data privacy, data security, 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 Nsc Norfolk.
Shortening product life cycle
– it is one of the major threat that Nsc Norfolk is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Nsc Norfolk needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
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 Nsc Norfolk in the Finance & Accounting sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Nsc Norfolk with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Stagnating economy with rate increase
– Nsc Norfolk 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Nsc Norfolk 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 Nsc Norfolk
– 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 Nsc Norfolk.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nsc Norfolk 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 Canadian Pacific's Bid for Norfolk Southern .
Weighted SWOT Analysis of Canadian Pacific's Bid for Norfolk Southern 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 Canadian Pacific's Bid for Norfolk Southern 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 Canadian Pacific's Bid for Norfolk Southern 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 Canadian Pacific's Bid for Norfolk Southern 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 Canadian Pacific's Bid for Norfolk Southern 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 Nsc Norfolk needs to make to build a sustainable competitive advantage.
