Case Study Description of Canaan Group: Reshaping the ECS Division
In January 2015, the chief executive officer (CEO) of the Canaan Group, a privately owned logistics conglomerate of businesses in Vancouver, Canada, was considering how to capitalize on opportunities in the freight forwarding industry. The first thing he needed to do was stabilize the Export Cargo Specialist (ECS) division. The ECS division focused on ocean freight forwarding-helping customers coordinate and ship goods from origin to destination. To counter a glut of shipping capacity and fall in demand over the past few years, the CEO had restructured the roles and assignments in the division. He attempted to create a cross-trained workforce capable of performing a range of functions for clients. However, issues emerged with the restructuring, leading to employee departures and, along with the industry changes, a net loss in operations. The CEO was looking to turn things around and avoid further mistakes. He wondered if he should give his restructuring experiment more time, bring in an experienced project manager, or promote a current ECS staff member to find a solution.
Swot Analysis of "Canaan Group: Reshaping the ECS Division" written by Kenneth Goh, Ken Mark includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ecs Canaan facing as an external strategic factors. Some of the topics covered in Canaan Group: Reshaping the ECS Division case study are - Strategic Management Strategies, Leadership, Leading teams and Organizational Development.
Some of the macro environment factors that can be used to understand the Canaan Group: Reshaping the ECS Division casestudy better are - – challanges to central banks by blockchain based private currencies, wage bills are increasing, technology disruption, supply chains are disrupted by pandemic , increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices,
increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Canaan Group: Reshaping the ECS Division
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Canaan Group: Reshaping the ECS Division case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ecs Canaan, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ecs Canaan 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 Canaan Group: Reshaping the ECS Division can be done for the following purposes –
1. Strategic planning using facts provided in Canaan Group: Reshaping the ECS Division case study
2. Improving business portfolio management of Ecs Canaan
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ecs Canaan
Strengths Canaan Group: Reshaping the ECS Division | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ecs Canaan in Canaan Group: Reshaping the ECS Division Harvard Business Review case study are -
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Ecs Canaan digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ecs Canaan has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to recruit top talent
– Ecs Canaan is one of the leading recruiters in the industry. Managers in the Canaan Group: Reshaping the ECS Division are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Ecs Canaan is present in almost all the verticals within the industry. This has provided firm in Canaan Group: Reshaping the ECS Division 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.
Innovation driven organization
– Ecs Canaan is one of the most innovative firm in sector. Manager in Canaan Group: Reshaping the ECS Division Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Ecs Canaan is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Organizational Development field
– Ecs Canaan 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 Ecs Canaan in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Ecs Canaan 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 Kenneth Goh, Ken Mark 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.
Highly skilled collaborators
– Ecs Canaan 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 Canaan Group: Reshaping the ECS Division HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Ecs Canaan in the sector have low bargaining power. Canaan Group: Reshaping the ECS Division has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ecs Canaan to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Ecs Canaan in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Canaan Group: Reshaping the ECS Division 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.
High switching costs
– The high switching costs that Ecs Canaan 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.
Weaknesses Canaan Group: Reshaping the ECS Division | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Canaan Group: Reshaping the ECS Division 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 Ecs Canaan supply chain. Even after few cautionary changes mentioned in the HBR case study - Canaan Group: Reshaping the ECS Division, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ecs Canaan vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Ecs Canaan 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 Canaan Group: Reshaping the ECS Division, it seems that the employees of Ecs Canaan 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.
Skills based hiring
– The stress on hiring functional specialists at Ecs Canaan 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.
No frontier risks strategy
– After analyzing the HBR case study Canaan Group: Reshaping the ECS Division, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Ecs Canaan is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Ecs Canaan needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ecs Canaan to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Canaan Group: Reshaping the ECS Division HBR case study mentions - Ecs Canaan takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High operating costs
– Compare to the competitors, firm in the HBR case study Canaan Group: Reshaping the ECS Division 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 Ecs Canaan 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Canaan Group: Reshaping the ECS Division, is just above the industry average. Ecs Canaan 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.
Need for greater diversity
– Ecs Canaan has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Canaan Group: Reshaping the ECS Division 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 Ecs Canaan has relatively successful track record of launching new products.
Opportunities Canaan Group: Reshaping the ECS Division | 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 Canaan Group: Reshaping the ECS Division are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ecs Canaan can use these opportunities to build new business models that can help the communities that Ecs Canaan operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Creating value in data economy
– The success of analytics program of Ecs Canaan has opened avenues for new revenue streams for the organization in the industry. This can help Ecs Canaan to build a more holistic ecosystem as suggested in the Canaan Group: Reshaping the ECS Division case study. Ecs Canaan can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Ecs Canaan 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.
Leveraging digital technologies
– Ecs Canaan 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.
Better consumer reach
– The expansion of the 5G network will help Ecs Canaan to increase its market reach. Ecs Canaan 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Ecs Canaan can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ecs Canaan is facing challenges because of the dominance of functional experts in the organization. Canaan Group: Reshaping the ECS Division 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ecs Canaan 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 Ecs Canaan to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Ecs Canaan 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 Canaan Group: Reshaping the ECS Division - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ecs Canaan to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ecs Canaan 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.
Building a culture of innovation
– managers at Ecs Canaan 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 Organizational Development segment.
Loyalty marketing
– Ecs Canaan 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ecs Canaan 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. Ecs Canaan can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Threats Canaan Group: Reshaping the ECS Division External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Canaan Group: Reshaping the ECS Division are -
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 Ecs Canaan.
Environmental challenges
– Ecs Canaan 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. Ecs Canaan can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Canaan Group: Reshaping the ECS Division, Ecs Canaan may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Increasing wage structure of Ecs Canaan
– 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 Ecs Canaan.
Regulatory challenges
– Ecs Canaan 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 Organizational Development industry regulations.
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. Ecs Canaan needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ecs Canaan with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Ecs Canaan in the Organizational Development sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Ecs Canaan 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.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ecs Canaan can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Ecs Canaan 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.
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. Ecs Canaan 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.
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 Canaan Group: Reshaping the ECS Division 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 Canaan Group: Reshaping the ECS Division 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 Canaan Group: Reshaping the ECS Division 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 Canaan Group: Reshaping the ECS Division 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 Canaan Group: Reshaping the ECS Division 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 Ecs Canaan needs to make to build a sustainable competitive advantage.