Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market
After the collapse of world oil prices during the late 1990s, Cheniere began shifting its business focus away from upstream exploration and toward LNG regasification to take advantage of a projected decline in domestic natural gas production and the natural gas supply deficit that was expected in the US over the next decade. Thanks to fracking, precisely the reverse happened and Cheniere shifted from importing gas to gas export with the Sabine Pass LNG facility that came on line in 2016.
Swot Analysis of "Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market" written by Paul Tice, Ingo Walter includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lng Cheniere facing as an external strategic factors. Some of the topics covered in Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market case study are - Strategic Management Strategies, Financial management, International business, Project management, Reorganization, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market casestudy better are - – cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices,
challanges to central banks by blockchain based private currencies, geopolitical disruptions, etc
Introduction to SWOT Analysis of Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lng Cheniere, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lng Cheniere 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 Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market can be done for the following purposes –
1. Strategic planning using facts provided in Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market case study
2. Improving business portfolio management of Lng Cheniere
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 Lng Cheniere
Strengths Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lng Cheniere in Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market 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.
Training and development
– Lng Cheniere has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market 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.
Superior customer experience
– The customer experience strategy of Lng Cheniere in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Lng Cheniere 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 Paul Tice, Ingo Walter 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.
Successful track record of launching new products
– Lng Cheniere has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lng Cheniere 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.
Strong track record of project management
– Lng Cheniere is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Lng Cheniere is present in almost all the verticals within the industry. This has provided firm in Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market 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.
Cross disciplinary teams
– Horizontal connected teams at the Lng Cheniere 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.
Effective Research and Development (R&D)
– Lng Cheniere 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 Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Lng Cheniere is one of the most innovative firm in sector. Manager in Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Lng Cheniere 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
– Lng Cheniere is one of the leading recruiters in the industry. Managers in the Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market are -
Slow to strategic competitive environment developments
– As Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market HBR case study mentions - Lng Cheniere 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, Lng Cheniere 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market, it seems that the employees of Lng Cheniere 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.
Capital Spending Reduction
– Even during the low interest decade, Lng Cheniere 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.
Low market penetration in new markets
– Outside its home market of Lng Cheniere, firm in the HBR case study Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Lng Cheniere is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Lng Cheniere needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lng Cheniere to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market, in the dynamic environment Lng Cheniere has struggled to respond to the nimble upstart competition. Lng Cheniere has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Lng Cheniere products
– To increase the profitability and margins on the products, Lng Cheniere needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Paul Tice, Ingo Walter suggests that, Lng Cheniere 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 decision making process
– As mentioned earlier in the report, Lng Cheniere 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. Lng Cheniere 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market 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 Lng Cheniere has relatively successful track record of launching new products.
Opportunities Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market | 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 Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lng Cheniere 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.
Creating value in data economy
– The success of analytics program of Lng Cheniere has opened avenues for new revenue streams for the organization in the industry. This can help Lng Cheniere to build a more holistic ecosystem as suggested in the Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market case study. Lng Cheniere can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Lng Cheniere can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Lng Cheniere to increase its market reach. Lng Cheniere 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.
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 Lng Cheniere in the consumer business. Now Lng Cheniere can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Lng Cheniere 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 Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lng Cheniere to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Lng Cheniere 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.
Building a culture of innovation
– managers at Lng Cheniere 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.
Developing new processes and practices
– Lng Cheniere 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lng Cheniere 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 Lng Cheniere to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lng Cheniere can use these opportunities to build new business models that can help the communities that Lng Cheniere operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Leveraging digital technologies
– Lng Cheniere 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lng Cheniere can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market, Lng Cheniere 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lng Cheniere 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.
Regulatory challenges
– Lng Cheniere 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.
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. Lng Cheniere 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.
Stagnating economy with rate increase
– Lng Cheniere 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.
Consumer confidence and its impact on Lng Cheniere 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 Lng Cheniere with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Lng Cheniere 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. Lng Cheniere can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
High dependence on third party suppliers
– Lng Cheniere 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.
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 Lng Cheniere in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lng Cheniere 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 Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market .
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. Lng Cheniere can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market 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 Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market 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 Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market 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 Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market 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 Cheniere's LNG Liquefaction Strategy: Pushing the Boundaries of the Project Finance Debt Market 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 Lng Cheniere needs to make to build a sustainable competitive advantage.
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