Temasek's Offer to Buy Olam International SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Temasek's Offer to Buy Olam International
Olam International, a publicly listed firm, was a leading agri-business with an integrated supply chain. To sustain growth, the company took on large amounts of debt to fund acquisitions and other capital expenditures. A hedge fund issued a Sell recommendation, highlighting the problems facing the company, including several years of negative free cash flows. The heated exchange between Olam and the hedge fund led to a government investment fund, Temasek Holdings, first backing Olam, and then eventually offering to buy out the minority shareholders. This scenario presents an excellent opportunity to apply the discounted cash flow analysis and relative valuation techniques to evaluate Temasek's offer. Ruth S. K. Tan is affiliated with NUS Business School. Zsuzsa R. Huszar is affiliated with NUS Business School. Weina Zhang is affiliated with NUS Business School.
Authors :: Ruth S.K. Tan, Zsuzsa R. Huszar, Weina Zhang
Swot Analysis of "Temasek's Offer to Buy Olam International" written by Ruth S.K. Tan, Zsuzsa R. Huszar, Weina Zhang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Olam Nus facing as an external strategic factors. Some of the topics covered in Temasek's Offer to Buy Olam International case study are - Strategic Management Strategies, Financial analysis, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Temasek's Offer to Buy Olam International casestudy better are - – increasing commodity prices, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions,
digital marketing is dominated by two big players Facebook and Google, technology disruption, etc
Introduction to SWOT Analysis of Temasek's Offer to Buy Olam International
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Temasek's Offer to Buy Olam International case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Olam Nus, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Olam Nus 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 Temasek's Offer to Buy Olam International can be done for the following purposes –
1. Strategic planning using facts provided in Temasek's Offer to Buy Olam International case study
2. Improving business portfolio management of Olam Nus
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 Olam Nus
Strengths Temasek's Offer to Buy Olam International | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Olam Nus in Temasek's Offer to Buy Olam International Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Temasek's Offer to Buy Olam International 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.
Superior customer experience
– The customer experience strategy of Olam Nus in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Finance & Accounting field
– Olam Nus 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 Olam Nus in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Olam Nus in the sector have low bargaining power. Temasek's Offer to Buy Olam International has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Olam Nus to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Olam Nus 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 Temasek's Offer to Buy Olam International - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Olam Nus has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Olam Nus 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.
Ability to recruit top talent
– Olam Nus is one of the leading recruiters in the industry. Managers in the Temasek's Offer to Buy Olam International are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Olam Nus is present in almost all the verticals within the industry. This has provided firm in Temasek's Offer to Buy Olam International 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.
Innovation driven organization
– Olam Nus is one of the most innovative firm in sector. Manager in Temasek's Offer to Buy Olam International 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
– Olam Nus has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Olam Nus 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
– Temasek's Offer to Buy Olam International firm has clearly differentiated products in the market place. This has enabled Olam Nus to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Olam Nus to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Olam Nus 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 Temasek's Offer to Buy Olam International HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Temasek's Offer to Buy Olam International | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Temasek's Offer to Buy Olam International are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Olam Nus is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Temasek's Offer to Buy Olam International 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Temasek's Offer to Buy Olam International HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Olam Nus has relatively successful track record of launching new products.
Need for greater diversity
– Olam Nus 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.
No frontier risks strategy
– After analyzing the HBR case study Temasek's Offer to Buy Olam International, 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 bargaining power of channel partners
– Because of the regulatory requirements, Ruth S.K. Tan, Zsuzsa R. Huszar, Weina Zhang suggests that, Olam Nus 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 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 Olam Nus supply chain. Even after few cautionary changes mentioned in the HBR case study - Temasek's Offer to Buy Olam International, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Olam Nus vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Olam Nus 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. Olam Nus 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Temasek's Offer to Buy Olam International 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 Olam Nus 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Olam Nus 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Temasek's Offer to Buy Olam International, in the dynamic environment Olam Nus has struggled to respond to the nimble upstart competition. Olam Nus has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Olam Nus 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 Temasek's Offer to Buy Olam International | 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 Temasek's Offer to Buy Olam International are -
Using analytics as competitive advantage
– Olam Nus 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 Temasek's Offer to Buy Olam International - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Olam Nus to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Olam Nus 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.
Learning at scale
– Online learning technologies has now opened space for Olam Nus 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.
Creating value in data economy
– The success of analytics program of Olam Nus has opened avenues for new revenue streams for the organization in the industry. This can help Olam Nus to build a more holistic ecosystem as suggested in the Temasek's Offer to Buy Olam International case study. Olam Nus can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Olam Nus 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.
Better consumer reach
– The expansion of the 5G network will help Olam Nus to increase its market reach. Olam Nus 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.
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. Olam Nus can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Olam Nus in the consumer business. Now Olam Nus can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Olam Nus 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.
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. Olam Nus 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. Olam Nus 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.
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 Olam Nus 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Olam Nus is facing challenges because of the dominance of functional experts in the organization. Temasek's Offer to Buy Olam International 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.
Loyalty marketing
– Olam Nus 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.
Threats Temasek's Offer to Buy Olam International External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Temasek's Offer to Buy Olam International are -
Environmental challenges
– Olam Nus 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. Olam Nus 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 Temasek's Offer to Buy Olam International, Olam Nus 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.
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.
Increasing wage structure of Olam Nus
– 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 Olam Nus.
Technology acceleration in Forth Industrial Revolution
– Olam Nus has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Olam Nus 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.
Consumer confidence and its impact on Olam Nus 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.
High dependence on third party suppliers
– Olam Nus 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.
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. Olam Nus can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Olam Nus needs to understand the core reasons impacting the Finance & Accounting 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 Olam Nus 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.
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 Olam Nus.
Stagnating economy with rate increase
– Olam Nus 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.
Weighted SWOT Analysis of Temasek's Offer to Buy Olam International 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 Temasek's Offer to Buy Olam International 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 Temasek's Offer to Buy Olam International 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 Temasek's Offer to Buy Olam International 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 Temasek's Offer to Buy Olam International 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 Olam Nus needs to make to build a sustainable competitive advantage.
