Restructuring a Utility: RWE's Carve-out of innogy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Restructuring a Utility: RWE's Carve-out of innogy
In 2016, the German utility RWE undertook a carve-out in which substantial parts of the company's assets and liabilities were offered to the general public as part of an IPO. The case describes the developments in the German energy landscape that led RWE to this unusual move. The case also examines how investors responded to this carve-out in terms of the valuations attached to RWE and the new subsidiary.
Authors :: Donna Bebb, Stephen Comello, Stefan Reichelstein
Swot Analysis of "Restructuring a Utility: RWE's Carve-out of innogy" written by Donna Bebb, Stephen Comello, Stefan Reichelstein includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Rwe Carve facing as an external strategic factors. Some of the topics covered in Restructuring a Utility: RWE's Carve-out of innogy case study are - Strategic Management Strategies, IPO, Reorganization and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Restructuring a Utility: RWE's Carve-out of innogy casestudy better are - – increasing commodity prices, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, geopolitical disruptions,
central banks are concerned over increasing inflation, wage bills are increasing, etc
Introduction to SWOT Analysis of Restructuring a Utility: RWE's Carve-out of innogy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Restructuring a Utility: RWE's Carve-out of innogy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Rwe Carve, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Rwe Carve 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 Restructuring a Utility: RWE's Carve-out of innogy can be done for the following purposes –
1. Strategic planning using facts provided in Restructuring a Utility: RWE's Carve-out of innogy case study
2. Improving business portfolio management of Rwe Carve
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Rwe Carve
Strengths Restructuring a Utility: RWE's Carve-out of innogy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Rwe Carve in Restructuring a Utility: RWE's Carve-out of innogy Harvard Business Review case study are -
Successful track record of launching new products
– Rwe Carve has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Rwe Carve 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.
Operational resilience
– The operational resilience strategy in the Restructuring a Utility: RWE's Carve-out of innogy 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
– Rwe Carve has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Rwe Carve to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Strategy & Execution field
– Rwe Carve 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 Rwe Carve in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Strategy & Execution industry
– Restructuring a Utility: RWE's Carve-out of innogy firm has clearly differentiated products in the market place. This has enabled Rwe Carve to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Rwe Carve to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Rwe Carve 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 Restructuring a Utility: RWE's Carve-out of innogy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Rwe Carve is one of the most innovative firm in sector. Manager in Restructuring a Utility: RWE's Carve-out of innogy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Rwe Carve is present in almost all the verticals within the industry. This has provided firm in Restructuring a Utility: RWE's Carve-out of innogy 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.
Organizational Resilience of Rwe Carve
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Rwe Carve does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Rwe Carve 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 Donna Bebb, Stephen Comello, Stefan Reichelstein 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.
Training and development
– Rwe Carve has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Restructuring a Utility: RWE's Carve-out of innogy Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Cross disciplinary teams
– Horizontal connected teams at the Rwe Carve 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.
Weaknesses Restructuring a Utility: RWE's Carve-out of innogy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Restructuring a Utility: RWE's Carve-out of innogy are -
No frontier risks strategy
– After analyzing the HBR case study Restructuring a Utility: RWE's Carve-out of innogy, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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 operating costs
– Compare to the competitors, firm in the HBR case study Restructuring a Utility: RWE's Carve-out of innogy 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 Rwe Carve 's lucrative customers.
Products dominated business model
– Even though Rwe Carve 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 - Restructuring a Utility: RWE's Carve-out of innogy should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Rwe Carve products
– To increase the profitability and margins on the products, Rwe Carve needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Restructuring a Utility: RWE's Carve-out of innogy, is just above the industry average. Rwe Carve 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.
Increasing silos among functional specialists
– The organizational structure of Rwe Carve is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Rwe Carve needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Rwe Carve to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Rwe Carve, firm in the HBR case study Restructuring a Utility: RWE's Carve-out of innogy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Rwe Carve 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. Rwe Carve 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 strategic competitive environment developments
– As Restructuring a Utility: RWE's Carve-out of innogy HBR case study mentions - Rwe Carve 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Rwe Carve 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.
Interest costs
– Compare to the competition, Rwe Carve 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.
Opportunities Restructuring a Utility: RWE's Carve-out of innogy | 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 Restructuring a Utility: RWE's Carve-out of innogy are -
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 Rwe Carve in the consumer business. Now Rwe Carve can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Rwe Carve can develop new processes and procedures in Strategy & Execution 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.
Building a culture of innovation
– managers at Rwe Carve 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 Strategy & Execution segment.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Rwe Carve 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, Restructuring a Utility: RWE's Carve-out of innogy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Rwe Carve can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Rwe Carve can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Learning at scale
– Online learning technologies has now opened space for Rwe Carve 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Rwe Carve can use these opportunities to build new business models that can help the communities that Rwe Carve operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Rwe Carve 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 Rwe Carve to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Rwe Carve 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.
Using analytics as competitive advantage
– Rwe Carve 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 Restructuring a Utility: RWE's Carve-out of innogy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Rwe Carve to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Rwe Carve is facing challenges because of the dominance of functional experts in the organization. Restructuring a Utility: RWE's Carve-out of innogy 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.
Buying journey improvements
– Rwe Carve can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Restructuring a Utility: RWE's Carve-out of innogy suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats Restructuring a Utility: RWE's Carve-out of innogy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Restructuring a Utility: RWE's Carve-out of innogy are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Rwe Carve with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Rwe Carve
– 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 Rwe Carve.
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 Rwe Carve in the Strategy & Execution sector and impact the bottomline of the organization.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Restructuring a Utility: RWE's Carve-out of innogy, Rwe Carve may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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 Rwe Carve.
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. Rwe Carve needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Rwe Carve in the Strategy & Execution industry. The Strategy & Execution 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.
Stagnating economy with rate increase
– Rwe Carve 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Rwe Carve 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 Restructuring a Utility: RWE's Carve-out of innogy .
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 Rwe Carve business can come under increasing regulations regarding data privacy, data security, etc.
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.
High dependence on third party suppliers
– Rwe Carve 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.
Weighted SWOT Analysis of Restructuring a Utility: RWE's Carve-out of innogy 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 Restructuring a Utility: RWE's Carve-out of innogy 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 Restructuring a Utility: RWE's Carve-out of innogy 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 Restructuring a Utility: RWE's Carve-out of innogy 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 Restructuring a Utility: RWE's Carve-out of innogy 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 Rwe Carve needs to make to build a sustainable competitive advantage.
