Ak Gida: IPO or Strategic Sale SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Ak Gida: IPO or Strategic Sale
In 2015, Yildiz Holding, one of the world's largest producer of confections, biscuits and crackers, was at the end of its divesture process from Ak Gida, one of the leading dairy companies in Turkey. The company had adopted a dual track process, pursuing an initial public offering (IPO) process as well as attempting, in parallel, a strategic sale to create a competitive bidding process. Ak Gida was co-founded in 1996 by the Ulker and Topbas families as a result of a joint vertical integration strategy: Ulker family, owners of Yildiz Holding, would secure milk powder, one of the main raw materials for its biscuits and chocolate production, and Topbas family would be able to create its own private label dairy products for its nation-wide hard-discount chain BIM. Following Yildiz Holding's acquisition of United Biscuits for over $3 billion in 2014, the Holding's CFO Cem Karakas and its Chief Strategy and Growth Officer Nurtac Ziyal Afridi, were tasked with divesting of its vertical assets including Ak Gida. The duo had prepared Ak Gida for an IPO in Istanbul, while also having negotiated with multiple parties for its sale. Now, the duo needed to make a final decision: should they go forward with the listing, or should they sell Ak Gida to the world's largest dairy company, Groupe Lactalis?
Swot Analysis of "Ak Gida: IPO or Strategic Sale" written by Suraj Srinivasan, Eren Kuzucu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Gida Ak facing as an external strategic factors. Some of the topics covered in Ak Gida: IPO or Strategic Sale case study are - Strategic Management Strategies, Crisis management, Decision making, Financial analysis, Growth strategy, IPO, Joint ventures, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Ak Gida: IPO or Strategic Sale casestudy better are - – central banks are concerned over increasing inflation, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, wage bills are increasing, increasing energy prices,
there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Ak Gida: IPO or Strategic Sale
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ak Gida: IPO or Strategic Sale case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Gida Ak, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Gida Ak 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 Ak Gida: IPO or Strategic Sale can be done for the following purposes –
1. Strategic planning using facts provided in Ak Gida: IPO or Strategic Sale case study
2. Improving business portfolio management of Gida Ak
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 Gida Ak
Strengths Ak Gida: IPO or Strategic Sale | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Gida Ak in Ak Gida: IPO or Strategic Sale Harvard Business Review case study are -
Learning organization
- Gida Ak 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 Gida Ak is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Ak Gida: IPO or Strategic Sale Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Gida Ak 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 Ak Gida: IPO or Strategic Sale - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Gida Ak 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.
High switching costs
– The high switching costs that Gida Ak 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.
Diverse revenue streams
– Gida Ak is present in almost all the verticals within the industry. This has provided firm in Ak Gida: IPO or Strategic Sale 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.
Successful track record of launching new products
– Gida Ak has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Gida Ak 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.
Highly skilled collaborators
– Gida Ak 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 Ak Gida: IPO or Strategic Sale HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Gida Ak
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Gida Ak does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Gida Ak is one of the most innovative firm in sector. Manager in Ak Gida: IPO or Strategic Sale Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Gida Ak has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Gida Ak to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Gida Ak digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Gida Ak 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.
Superior customer experience
– The customer experience strategy of Gida Ak in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Ak Gida: IPO or Strategic Sale | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ak Gida: IPO or Strategic Sale are -
Lack of clear differentiation of Gida Ak products
– To increase the profitability and margins on the products, Gida Ak needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Ak Gida: IPO or Strategic Sale that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Ak Gida: IPO or Strategic Sale can leverage the sales team experience to cultivate customer relationships as Gida Ak is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Gida Ak 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.
Capital Spending Reduction
– Even during the low interest decade, Gida Ak 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.
No frontier risks strategy
– After analyzing the HBR case study Ak Gida: IPO or Strategic Sale, 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.
Low market penetration in new markets
– Outside its home market of Gida Ak, firm in the HBR case study Ak Gida: IPO or Strategic Sale needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Gida Ak 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.
Slow to strategic competitive environment developments
– As Ak Gida: IPO or Strategic Sale HBR case study mentions - Gida Ak 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Ak Gida: IPO or Strategic Sale, is just above the industry average. Gida Ak 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ak Gida: IPO or Strategic Sale, in the dynamic environment Gida Ak has struggled to respond to the nimble upstart competition. Gida Ak has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Gida Ak 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.
Opportunities Ak Gida: IPO or Strategic Sale | 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 Ak Gida: IPO or Strategic Sale are -
Loyalty marketing
– Gida Ak 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 Gida Ak can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Gida Ak 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Gida Ak 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 Gida Ak to hire the very best people irrespective of their geographical location.
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 Gida Ak in the consumer business. Now Gida Ak can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Gida Ak has opened avenues for new revenue streams for the organization in the industry. This can help Gida Ak to build a more holistic ecosystem as suggested in the Ak Gida: IPO or Strategic Sale case study. Gida Ak can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Gida Ak 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. Gida Ak 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.
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. Gida Ak can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Gida Ak can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Gida Ak to increase its market reach. Gida Ak 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.
Buying journey improvements
– Gida Ak can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ak Gida: IPO or Strategic Sale 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.
Developing new processes and practices
– Gida Ak 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.
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 Gida Ak 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 Ak Gida: IPO or Strategic Sale External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ak Gida: IPO or Strategic Sale are -
Regulatory challenges
– Gida Ak 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.
High dependence on third party suppliers
– Gida Ak 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.
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 Gida Ak in the Finance & Accounting sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Gida Ak 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Gida Ak with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Gida Ak.
Shortening product life cycle
– it is one of the major threat that Gida Ak is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Gida Ak business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Gida Ak
– 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 Gida Ak.
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 Ak Gida: IPO or Strategic Sale, Gida Ak 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 .
Environmental challenges
– Gida Ak 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. Gida Ak can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Technology acceleration in Forth Industrial Revolution
– Gida Ak has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Gida Ak 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.
Weighted SWOT Analysis of Ak Gida: IPO or Strategic Sale 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 Ak Gida: IPO or Strategic Sale 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 Ak Gida: IPO or Strategic Sale 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 Ak Gida: IPO or Strategic Sale 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 Ak Gida: IPO or Strategic Sale 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 Gida Ak needs to make to build a sustainable competitive advantage.