Case Study Description of ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A)
ABN-AMRO, the largest bank in the Netherlands, must decide whether to take any action in regard to the poor performance of Smit Transformatoren, a Dutch transformer manufacturer. ABN-AMRO acted as lead underwriter for the IPO of Smit, and also released a favorable equity research report around the time of the IPO. Smit's stock price initially performed favorably, but then fell significantly in conjunction with poor earnings announcements and other bad news.
Swot Analysis of "ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A)" written by Peter Tufano, Cameron Poetzscher includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Smit Abn facing as an external strategic factors. Some of the topics covered in ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) case study are - Strategic Management Strategies, IPO, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) casestudy better are - – wage bills are increasing, supply chains are disrupted by pandemic , increasing commodity prices, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%,
technology disruption, geopolitical disruptions, etc
Introduction to SWOT Analysis of ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Smit Abn, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Smit Abn 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 ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) can be done for the following purposes –
1. Strategic planning using facts provided in ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) case study
2. Improving business portfolio management of Smit Abn
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 Smit Abn
Strengths ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Smit Abn in ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) Harvard Business Review case study are -
Sustainable margins compare to other players in Finance & Accounting industry
– ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) firm has clearly differentiated products in the market place. This has enabled Smit Abn to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Smit Abn to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Smit Abn is present in almost all the verticals within the industry. This has provided firm in ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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.
Low bargaining power of suppliers
– Suppliers of Smit Abn in the sector have low bargaining power. ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Smit Abn to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Smit Abn has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Smit Abn 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.
Innovation driven organization
– Smit Abn is one of the most innovative firm in sector. Manager in ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Smit Abn 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.
Learning organization
- Smit Abn 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 Smit Abn is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Smit Abn 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 ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Smit Abn digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Smit Abn 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.
Ability to recruit top talent
– Smit Abn is one of the leading recruiters in the industry. Managers in the ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Smit Abn 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 ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) are -
Capital Spending Reduction
– Even during the low interest decade, Smit Abn 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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 Smit Abn has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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 ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) can leverage the sales team experience to cultivate customer relationships as Smit Abn is planning to shift buying processes online.
High cash cycle compare to competitors
Smit Abn 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.
Slow decision making process
– As mentioned earlier in the report, Smit Abn 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. Smit Abn 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 ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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 Smit Abn 's lucrative customers.
Need for greater diversity
– Smit Abn 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A), is just above the industry average. Smit Abn 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.
Products dominated business model
– Even though Smit Abn 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 - ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Smit Abn products
– To increase the profitability and margins on the products, Smit Abn needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Smit Abn has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Opportunities ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) | 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 ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) are -
Manufacturing automation
– Smit Abn 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Smit Abn is facing challenges because of the dominance of functional experts in the organization. ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Smit Abn can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Smit Abn can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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.
Leveraging digital technologies
– Smit Abn 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Smit Abn can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Building a culture of innovation
– managers at Smit Abn 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.
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 Smit Abn in the consumer business. Now Smit Abn can target international markets with far fewer capital restrictions requirements than the existing system.
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. Smit Abn 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 Smit Abn to increase its market reach. Smit Abn 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.
Learning at scale
– Online learning technologies has now opened space for Smit Abn 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, Smit Abn can use these opportunities to build new business models that can help the communities that Smit Abn operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Smit Abn can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) are -
Increasing wage structure of Smit Abn
– 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 Smit Abn.
Shortening product life cycle
– it is one of the major threat that Smit Abn 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 Smit Abn business can come under increasing regulations regarding data privacy, data security, etc.
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.
High dependence on third party suppliers
– Smit Abn 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 Smit Abn 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Smit Abn 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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Smit Abn will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– Smit Abn 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.
Technology acceleration in Forth Industrial Revolution
– Smit Abn has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Smit Abn 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Smit Abn with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Smit Abn in the Finance & Accounting sector and impact the bottomline of the organization.
Environmental challenges
– Smit Abn 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. Smit Abn can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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 ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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 ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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 ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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 ABN-AMRO Holding N.V. and Smit Transformatoren N.V. (A) 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 Smit Abn needs to make to build a sustainable competitive advantage.