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 - – wage bills are increasing, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, geopolitical disruptions, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%,
supply chains are disrupted by pandemic , increasing commodity prices, 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 -
Diverse revenue streams
– Cn's Gbr is present in almost all the verticals within the industry. This has provided firm in Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square 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.
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.
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.
Learning organization
- Cn's Gbr 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 Cn's Gbr is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Ability to lead change in Finance & Accounting field
– Cn's Gbr 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 Cn's Gbr in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
Effective Research and Development (R&D)
– Cn's Gbr 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 Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
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 -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square, in the dynamic environment Cn's Gbr has struggled to respond to the nimble upstart competition. Cn's Gbr has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square, it seems that the employees of Cn's Gbr 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.
Slow decision making process
– As mentioned earlier in the report, Cn's Gbr 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. Cn's Gbr 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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Stephen R. Foerster, W. Glenn Rowe, Chris Makuch, Ken Mark suggests that, Cn's Gbr 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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Unlocking Value at Canadian Pacific: The Proxy Battle with Pershing Square 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 Cn's Gbr has relatively successful track record of launching new products.
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.
Lack of clear differentiation of Cn's Gbr products
– To increase the profitability and margins on the products, Cn's Gbr needs to provide more differentiated products than what it is currently offering in the marketplace.
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 -
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cn's Gbr 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. Cn's Gbr 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.
Developing new processes and practices
– Cn's Gbr 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.
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.
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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cn's Gbr can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Cn's Gbr to increase its market reach. Cn's Gbr 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 Cn's Gbr in the consumer business. Now Cn's Gbr can target international markets with far fewer capital restrictions requirements than the existing system.
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 Cn's Gbr 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.
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 -
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.
Shortening product life cycle
– it is one of the major threat that Cn's Gbr is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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. Cn's Gbr 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.
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.
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 Cn's Gbr business can come under increasing regulations regarding data privacy, data security, etc.
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 .
Technology acceleration in Forth Industrial Revolution
– Cn's Gbr has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Cn's Gbr needs to keep up with the evolution of technology in the Finance & Accounting 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.
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 .
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.
Environmental challenges
– Cn's Gbr 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. Cn's Gbr can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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.
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.
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.