Unlocking Value at CSX: Responding to Requests from Mantle Ridge SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Unlocking Value at CSX: Responding to Requests from Mantle Ridge
In 2017, hedge fund Mantle Ridge acquired less than 5 per cent of the stock of CSX Corporation (CSX) and made demands for board representation as well as the installation of a new chief executive officer (CEO) of CSX. This new CEO had abruptly resigned from Canadian Pacific (CP) and joined forces with Mantle Ridge at the time the fund announced its activist position in CSX. On February 14, 2017, CSX management announced a special meeting and shareholders' vote to respond to Mantle Ridge's demands, which included a compensation package for this new CEO, estimated at $300 million. In light of the improvements at CP, could the same model be implemented successfully at CSX? If so, was the proposed compensation package for an incoming CEO justified? The chief investment officer of a large U.S. pension fund, has been asked to vote at the upcoming meeting and faces two main questions: Should she vote in favour of approving the package? Alternatively, should she sell CSX stock now?
Swot Analysis of "Unlocking Value at CSX: Responding to Requests from Mantle Ridge" written by Stephen R. Foerster, Ken Mark includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Csx Mantle facing as an external strategic factors. Some of the topics covered in Unlocking Value at CSX: Responding to Requests from Mantle Ridge 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 CSX: Responding to Requests from Mantle Ridge casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, increasing commodity prices, supply chains are disrupted by pandemic , wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy,
cloud computing is disrupting traditional business models, increasing energy prices, etc
Introduction to SWOT Analysis of Unlocking Value at CSX: Responding to Requests from Mantle Ridge
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Unlocking Value at CSX: Responding to Requests from Mantle Ridge case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Csx Mantle, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Csx Mantle 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 CSX: Responding to Requests from Mantle Ridge can be done for the following purposes –
1. Strategic planning using facts provided in Unlocking Value at CSX: Responding to Requests from Mantle Ridge case study
2. Improving business portfolio management of Csx Mantle
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 Csx Mantle
Strengths Unlocking Value at CSX: Responding to Requests from Mantle Ridge | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Csx Mantle in Unlocking Value at CSX: Responding to Requests from Mantle Ridge Harvard Business Review case study are -
Ability to lead change in Finance & Accounting field
– Csx Mantle 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 Csx Mantle in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Unlocking Value at CSX: Responding to Requests from Mantle Ridge 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.
Analytics focus
– Csx Mantle 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, 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
– Csx Mantle 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 CSX: Responding to Requests from Mantle Ridge HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Csx Mantle has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Csx Mantle 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 CSX: Responding to Requests from Mantle Ridge firm has clearly differentiated products in the market place. This has enabled Csx Mantle to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Csx Mantle to invest into research and development (R&D) and innovation.
Strong track record of project management
– Csx Mantle is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Csx Mantle is one of the leading recruiters in the industry. Managers in the Unlocking Value at CSX: Responding to Requests from Mantle Ridge 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 Csx Mantle in the sector have low bargaining power. Unlocking Value at CSX: Responding to Requests from Mantle Ridge has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Csx Mantle to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Csx Mantle is present in almost all the verticals within the industry. This has provided firm in Unlocking Value at CSX: Responding to Requests from Mantle Ridge 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
– Csx Mantle has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Csx Mantle 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.
Organizational Resilience of Csx Mantle
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Csx Mantle does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Unlocking Value at CSX: Responding to Requests from Mantle Ridge | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Unlocking Value at CSX: Responding to Requests from Mantle Ridge are -
Need for greater diversity
– Csx Mantle has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Unlocking Value at CSX: Responding to Requests from Mantle Ridge HBR case study mentions - Csx Mantle 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.
Interest costs
– Compare to the competition, Csx Mantle 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.
Lack of clear differentiation of Csx Mantle products
– To increase the profitability and margins on the products, Csx Mantle needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Stephen R. Foerster, Ken Mark suggests that, Csx Mantle 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Unlocking Value at CSX: Responding to Requests from Mantle Ridge, in the dynamic environment Csx Mantle has struggled to respond to the nimble upstart competition. Csx Mantle has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Unlocking Value at CSX: Responding to Requests from Mantle Ridge 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 Csx Mantle 's lucrative customers.
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 Csx Mantle supply chain. Even after few cautionary changes mentioned in the HBR case study - Unlocking Value at CSX: Responding to Requests from Mantle Ridge, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Csx Mantle vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Csx Mantle 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. Csx Mantle 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, Csx Mantle is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Unlocking Value at CSX: Responding to Requests from Mantle Ridge 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
Csx Mantle 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 Unlocking Value at CSX: Responding to Requests from Mantle Ridge | 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 CSX: Responding to Requests from Mantle Ridge are -
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 Csx Mantle 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.
Manufacturing automation
– Csx Mantle can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Building a culture of innovation
– managers at Csx Mantle 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.
Developing new processes and practices
– Csx Mantle 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. Csx Mantle can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Csx Mantle 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
– Csx Mantle 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 Unlocking Value at CSX: Responding to Requests from Mantle Ridge - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Csx Mantle to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Csx Mantle 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.
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. Csx Mantle 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. Csx Mantle 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Csx Mantle can use these opportunities to build new business models that can help the communities that Csx Mantle operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Better consumer reach
– The expansion of the 5G network will help Csx Mantle to increase its market reach. Csx Mantle 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 Csx Mantle in the consumer business. Now Csx Mantle 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 Csx Mantle has opened avenues for new revenue streams for the organization in the industry. This can help Csx Mantle to build a more holistic ecosystem as suggested in the Unlocking Value at CSX: Responding to Requests from Mantle Ridge case study. Csx Mantle can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Unlocking Value at CSX: Responding to Requests from Mantle Ridge 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 CSX: Responding to Requests from Mantle Ridge are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Csx Mantle 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 CSX: Responding to Requests from Mantle Ridge .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Csx Mantle 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.
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
– Csx Mantle 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. Csx Mantle can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Shortening product life cycle
– it is one of the major threat that Csx Mantle is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Csx Mantle in the Finance & Accounting sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Csx Mantle 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.
Consumer confidence and its impact on Csx Mantle demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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. Csx Mantle can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Csx Mantle 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 Csx Mantle
– 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 Csx Mantle.
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 Csx Mantle.
Weighted SWOT Analysis of Unlocking Value at CSX: Responding to Requests from Mantle Ridge 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 CSX: Responding to Requests from Mantle Ridge 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 CSX: Responding to Requests from Mantle Ridge 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 CSX: Responding to Requests from Mantle Ridge 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 CSX: Responding to Requests from Mantle Ridge 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 Csx Mantle needs to make to build a sustainable competitive advantage.