Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square
A principal at the hedge fund GBR Capital needed to determine how best to vote her fund's shares in the upcoming annual shareholders' meeting for Canadian Pacific (CP). For the previous decade, CP's shares had underperformed compared to its key Canadian rival, Canadian National Railway (CN). The key difference appeared to be CN's chief operating officer, who later became CN's chief executive officer. He was able to cut costs, which boosted CN's profits. In October 2011, Pershing Square, a hedge fund, acquired a 12.2 per cent stake in CP, investing a total of CA$1.1 billion, and proposed appointing CN's chief executive officer as CP's new chief executive officer. The principal at GBR Capital needed to investigate and quantify the extent to which an activist investor could unlock value in an under-performing firm.
Authors :: Stephen R. Foerster, W. Glenn Rowe, Chris Makuch, Ken Mark
Swot Analysis of "Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square" written by Stephen R. Foerster, W. Glenn Rowe, Chris Makuch, Ken Mark includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cn's Gbr facing as an external strategic factors. Some of the topics covered in Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square case study are - Strategic Management Strategies, Financial analysis and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square casestudy better are - – increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, technology disruption,
customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, etc
Introduction to SWOT Analysis of Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cn's Gbr, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cn's Gbr 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 Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square can be done for the following purposes –
1. Strategic planning using facts provided in Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square case study
2. Improving business portfolio management of Cn's Gbr
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 Cn's Gbr
Strengths Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cn's Gbr in Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Cn's Gbr 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.
Ability to recruit top talent
– Cn's Gbr is one of the leading recruiters in the industry. Managers in the Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square firm has clearly differentiated products in the market place. This has enabled Cn's Gbr to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Cn's Gbr to invest into research and development (R&D) and innovation.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Cn's Gbr digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cn's Gbr 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.
Successful track record of launching new products
– Cn's Gbr has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cn's Gbr 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.
High switching costs
– The high switching costs that Cn's Gbr 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.
High brand equity
– Cn's Gbr has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cn's Gbr to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Cn's Gbr 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 Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Cn's Gbr 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 Stephen R. Foerster, W. Glenn Rowe, Chris Makuch, 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.
Innovation driven organization
– Cn's Gbr is one of the most innovative firm in sector. Manager in Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square 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
– Cn's Gbr is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square, is just above the industry average. Cn's Gbr 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.
Products dominated business model
– Even though Cn's Gbr 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 - Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cn's Gbr is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Cn's Gbr 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.
Increasing silos among functional specialists
– The organizational structure of Cn's Gbr is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Cn's Gbr needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cn's Gbr to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Cn's Gbr 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.
Capital Spending Reduction
– Even during the low interest decade, Cn's Gbr 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 Cn's Gbr, firm in the HBR case study Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Cn's Gbr needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
No frontier risks strategy
– After analyzing the HBR case study Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Need for greater diversity
– Cn's Gbr 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.
Opportunities Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square | 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 Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square are -
Creating value in data economy
– The success of analytics program of Cn's Gbr has opened avenues for new revenue streams for the organization in the industry. This can help Cn's Gbr to build a more holistic ecosystem as suggested in the Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square case study. Cn's Gbr can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Cn's Gbr 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.
Building a culture of innovation
– managers at Cn's Gbr 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.
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. Cn's Gbr can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Cn's Gbr 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cn's Gbr can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cn's Gbr 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.
Learning at scale
– Online learning technologies has now opened space for Cn's Gbr 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.
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. Cn's Gbr can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cn's Gbr can use these opportunities to build new business models that can help the communities that Cn's Gbr operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cn's Gbr 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 Cn's Gbr to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cn's Gbr 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cn's Gbr is facing challenges because of the dominance of functional experts in the organization. Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square are -
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.
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 Cn's Gbr in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing wage structure of Cn's Gbr
– 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 Cn's Gbr.
High dependence on third party suppliers
– Cn's Gbr 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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cn's Gbr 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 Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square .
Stagnating economy with rate increase
– Cn's Gbr 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square, Cn's Gbr 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 .
Consumer confidence and its impact on Cn's Gbr 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 Cn's Gbr with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Cn's Gbr needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Cn's Gbr.
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. Cn's Gbr can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square 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 Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square 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 Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square 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 Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square 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 Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square 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 Cn's Gbr needs to make to build a sustainable competitive advantage.
