Case Study Description of Ardian: Portfolio Company Governance (A)
Leaders of the mid cap buyout group at Ardian, the Paris-based private equity firm led by Dominique Senequier, have been asked to review and assess the governance model the firm uses for majority-owned companies in its portfolio. The case describes the governance model and then shows how it has worked in practice at two companies: Italy's orthopedic implant maker Lima Corporate and French chemical company Novacap. For each company, the case describes how Ardian decided on the investment and established a board of directors, and details the deliberations around some of the critical decisions made by each board during Ardian's tenure as majority shareholder. Through the two examples of Lima and Novacap, the case invites students to evaluate Ardian's approach to corporate governance in its portfolio companies and to recommend possible changes or improvements.
Swot Analysis of "Ardian: Portfolio Company Governance (A)" written by Lynn Sharp Paine, Emer Moloney, Tonia Labruyere includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ardian Ardian's facing as an external strategic factors. Some of the topics covered in Ardian: Portfolio Company Governance (A) case study are - Strategic Management Strategies, Decision making, Entrepreneurial finance, Strategy and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Ardian: Portfolio Company Governance (A) casestudy better are - – central banks are concerned over increasing inflation, increasing transportation and logistics costs, technology disruption, increasing household debt because of falling income levels, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google,
supply chains are disrupted by pandemic , increasing commodity prices, etc
Introduction to SWOT Analysis of Ardian: Portfolio Company Governance (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ardian: Portfolio Company Governance (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ardian Ardian's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ardian Ardian's 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 Ardian: Portfolio Company Governance (A) can be done for the following purposes –
1. Strategic planning using facts provided in Ardian: Portfolio Company Governance (A) case study
2. Improving business portfolio management of Ardian Ardian's
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ardian Ardian's
Strengths Ardian: Portfolio Company Governance (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ardian Ardian's in Ardian: Portfolio Company Governance (A) Harvard Business Review case study are -
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Ardian Ardian's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ardian Ardian's 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.
Analytics focus
– Ardian Ardian's 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 Lynn Sharp Paine, Emer Moloney, Tonia Labruyere 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
– Ardian Ardian's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ardian Ardian's 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.
Ability to lead change in Leadership & Managing People field
– Ardian Ardian's 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 Ardian Ardian's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Ardian Ardian's is one of the leading recruiters in the industry. Managers in the Ardian: Portfolio Company Governance (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Ardian Ardian's is one of the most innovative firm in sector. Manager in Ardian: Portfolio Company Governance (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Ardian Ardian's 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 Ardian Ardian's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Ardian: Portfolio Company Governance (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Ardian Ardian's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Ardian Ardian's in the sector have low bargaining power. Ardian: Portfolio Company Governance (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ardian Ardian's to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Ardian Ardian's 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
– Ardian Ardian's is present in almost all the verticals within the industry. This has provided firm in Ardian: Portfolio Company Governance (A) 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.
High brand equity
– Ardian Ardian's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ardian Ardian's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Ardian: Portfolio Company Governance (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ardian: Portfolio Company Governance (A) are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ardian: Portfolio Company Governance (A), in the dynamic environment Ardian Ardian's has struggled to respond to the nimble upstart competition. Ardian Ardian's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Ardian: Portfolio Company Governance (A), it seems that the employees of Ardian Ardian's 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Ardian: Portfolio Company Governance (A) 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 Ardian Ardian's 's lucrative customers.
Products dominated business model
– Even though Ardian Ardian's 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 - Ardian: Portfolio Company Governance (A) should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Ardian Ardian's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High cash cycle compare to competitors
Ardian Ardian's has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Low market penetration in new markets
– Outside its home market of Ardian Ardian's, firm in the HBR case study Ardian: Portfolio Company Governance (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Ardian: Portfolio Company Governance (A) HBR case study mentions - Ardian Ardian's 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.
Increasing silos among functional specialists
– The organizational structure of Ardian Ardian's is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Ardian Ardian's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ardian Ardian's to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study Ardian: Portfolio Company Governance (A) 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 Ardian: Portfolio Company Governance (A) can leverage the sales team experience to cultivate customer relationships as Ardian Ardian's is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Ardian Ardian's 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. Ardian Ardian's 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.
Opportunities Ardian: Portfolio Company Governance (A) | 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 Ardian: Portfolio Company Governance (A) are -
Manufacturing automation
– Ardian Ardian's can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ardian Ardian's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
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 Ardian Ardian's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ardian Ardian's can use these opportunities to build new business models that can help the communities that Ardian Ardian's operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ardian Ardian's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Ardian Ardian's 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 Ardian: Portfolio Company Governance (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ardian Ardian's 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 Ardian Ardian's in the consumer business. Now Ardian Ardian's can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Ardian Ardian's 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ardian Ardian's 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. Ardian Ardian's 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.
Building a culture of innovation
– managers at Ardian Ardian's 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 Leadership & Managing People segment.
Leveraging digital technologies
– Ardian Ardian's 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ardian Ardian's is facing challenges because of the dominance of functional experts in the organization. Ardian: Portfolio Company Governance (A) 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Ardian Ardian's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Ardian: Portfolio Company Governance (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ardian: Portfolio Company Governance (A) are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ardian Ardian's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Ardian Ardian's 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 Ardian Ardian's.
Consumer confidence and its impact on Ardian Ardian's 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.
Stagnating economy with rate increase
– Ardian Ardian's 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.
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. Ardian Ardian's needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Ardian: Portfolio Company Governance (A), Ardian Ardian's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Technology acceleration in Forth Industrial Revolution
– Ardian Ardian's has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Ardian Ardian's needs to keep up with the evolution of technology in the Leadership & Managing People 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.
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. Ardian Ardian's 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ardian Ardian's in the Leadership & Managing People industry. The Leadership & Managing People 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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ardian Ardian's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Ardian Ardian's
– 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 Ardian Ardian's.
Weighted SWOT Analysis of Ardian: Portfolio Company Governance (A) 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 Ardian: Portfolio Company Governance (A) 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 Ardian: Portfolio Company Governance (A) 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 Ardian: Portfolio Company Governance (A) 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 Ardian: Portfolio Company Governance (A) 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 Ardian Ardian's needs to make to build a sustainable competitive advantage.