Swot Analysis of "Blue Harbour's Activism at Babcock & Wilcox" written by Suraj Srinivasan, Quinn Pitcher includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wilcox Babcock facing as an external strategic factors. Some of the topics covered in Blue Harbour's Activism at Babcock & Wilcox case study are - Strategic Management Strategies, Corporate governance, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Blue Harbour's Activism at Babcock & Wilcox casestudy better are - – increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing,
digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Blue Harbour's Activism at Babcock & Wilcox
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Blue Harbour's Activism at Babcock & Wilcox case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wilcox Babcock, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wilcox Babcock 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 Blue Harbour's Activism at Babcock & Wilcox can be done for the following purposes –
1. Strategic planning using facts provided in Blue Harbour's Activism at Babcock & Wilcox case study
2. Improving business portfolio management of Wilcox Babcock
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 Wilcox Babcock
Strengths Blue Harbour's Activism at Babcock & Wilcox | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wilcox Babcock in Blue Harbour's Activism at Babcock & Wilcox Harvard Business Review case study are -
Highly skilled collaborators
– Wilcox Babcock 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 Blue Harbour's Activism at Babcock & Wilcox HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Wilcox Babcock is one of the most innovative firm in sector. Manager in Blue Harbour's Activism at Babcock & Wilcox 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
– Wilcox Babcock is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Wilcox Babcock 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.
Organizational Resilience of Wilcox Babcock
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Wilcox Babcock does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Blue Harbour's Activism at Babcock & Wilcox 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.
Ability to recruit top talent
– Wilcox Babcock is one of the leading recruiters in the industry. Managers in the Blue Harbour's Activism at Babcock & Wilcox are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Wilcox Babcock in the sector have low bargaining power. Blue Harbour's Activism at Babcock & Wilcox has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Wilcox Babcock to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Wilcox Babcock has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Wilcox Babcock to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Wilcox Babcock 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 Wilcox Babcock is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Blue Harbour's Activism at Babcock & Wilcox Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Wilcox Babcock is present in almost all the verticals within the industry. This has provided firm in Blue Harbour's Activism at Babcock & Wilcox 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Blue Harbour's Activism at Babcock & Wilcox firm has clearly differentiated products in the market place. This has enabled Wilcox Babcock to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Wilcox Babcock to invest into research and development (R&D) and innovation.
Weaknesses Blue Harbour's Activism at Babcock & Wilcox | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Blue Harbour's Activism at Babcock & Wilcox are -
High bargaining power of channel partners
– Because of the regulatory requirements, Suraj Srinivasan, Quinn Pitcher suggests that, Wilcox Babcock 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Blue Harbour's Activism at Babcock & Wilcox 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 Wilcox Babcock 's lucrative customers.
Interest costs
– Compare to the competition, Wilcox Babcock 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.
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 Wilcox Babcock supply chain. Even after few cautionary changes mentioned in the HBR case study - Blue Harbour's Activism at Babcock & Wilcox, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Wilcox Babcock vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Blue Harbour's Activism at Babcock & Wilcox, 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.
High cash cycle compare to competitors
Wilcox Babcock 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.
Capital Spending Reduction
– Even during the low interest decade, Wilcox Babcock 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Blue Harbour's Activism at Babcock & Wilcox, is just above the industry average. Wilcox Babcock 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.
Low market penetration in new markets
– Outside its home market of Wilcox Babcock, firm in the HBR case study Blue Harbour's Activism at Babcock & Wilcox needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Blue Harbour's Activism at Babcock & Wilcox, in the dynamic environment Wilcox Babcock has struggled to respond to the nimble upstart competition. Wilcox Babcock has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Wilcox Babcock 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.
Opportunities Blue Harbour's Activism at Babcock & Wilcox | 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 Blue Harbour's Activism at Babcock & Wilcox are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wilcox Babcock 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.
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 Wilcox Babcock in the consumer business. Now Wilcox Babcock can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Wilcox Babcock to increase its market reach. Wilcox Babcock 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.
Leveraging digital technologies
– Wilcox Babcock 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Wilcox Babcock can use these opportunities to build new business models that can help the communities that Wilcox Babcock operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Learning at scale
– Online learning technologies has now opened space for Wilcox Babcock 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Wilcox Babcock 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.
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. Wilcox Babcock can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Wilcox Babcock 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 Blue Harbour's Activism at Babcock & Wilcox - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Wilcox Babcock to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Wilcox Babcock 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 Wilcox Babcock to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Wilcox Babcock has opened avenues for new revenue streams for the organization in the industry. This can help Wilcox Babcock to build a more holistic ecosystem as suggested in the Blue Harbour's Activism at Babcock & Wilcox case study. Wilcox Babcock can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Wilcox Babcock 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Wilcox Babcock can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Blue Harbour's Activism at Babcock & Wilcox External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Blue Harbour's Activism at Babcock & Wilcox are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Wilcox Babcock with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Wilcox Babcock needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
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. Wilcox Babcock can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Wilcox Babcock has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Wilcox Babcock 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.
Shortening product life cycle
– it is one of the major threat that Wilcox Babcock is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Wilcox Babcock 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.
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 Wilcox Babcock in the Finance & Accounting sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Wilcox Babcock 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.
Stagnating economy with rate increase
– Wilcox Babcock 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wilcox Babcock in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Wilcox Babcock 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. Wilcox Babcock can take advantage of this fund but it will also bring new competitors in the Finance & Accounting 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 Blue Harbour's Activism at Babcock & Wilcox, Wilcox Babcock 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 .
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 Blue Harbour's Activism at Babcock & Wilcox 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 Blue Harbour's Activism at Babcock & Wilcox 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 Blue Harbour's Activism at Babcock & Wilcox 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 Blue Harbour's Activism at Babcock & Wilcox 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 Blue Harbour's Activism at Babcock & Wilcox 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 Wilcox Babcock needs to make to build a sustainable competitive advantage.