Case Study Description of New Denmark Sawmill Upgrade
The president of Jackson Limited's sawmill division was reviewing proposals to upgrade and modernize the sawmill at the New Denmark site in New Brunswick. He was faced with different alternatives ranging from a capital requirement of $6 million to as high as $14 million. The president must make a capital budget decision that will take into account several uncertainties.
Swot Analysis of "New Denmark Sawmill Upgrade" written by Mary Heisz, Dan Marino includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sawmill Denmark facing as an external strategic factors. Some of the topics covered in New Denmark Sawmill Upgrade case study are - Strategic Management Strategies, Financial analysis, Managing uncertainty and Finance & Accounting.
Some of the macro environment factors that can be used to understand the New Denmark Sawmill Upgrade casestudy better are - – there is backlash against globalization, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, increasing transportation and logistics costs,
cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of New Denmark Sawmill Upgrade
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in New Denmark Sawmill Upgrade case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sawmill Denmark, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sawmill Denmark 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 New Denmark Sawmill Upgrade can be done for the following purposes –
1. Strategic planning using facts provided in New Denmark Sawmill Upgrade case study
2. Improving business portfolio management of Sawmill Denmark
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 Sawmill Denmark
Strengths New Denmark Sawmill Upgrade | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sawmill Denmark in New Denmark Sawmill Upgrade Harvard Business Review case study are -
High brand equity
– Sawmill Denmark has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sawmill Denmark to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Sawmill Denmark is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Sawmill Denmark 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 New Denmark Sawmill Upgrade - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Sawmill Denmark has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in New Denmark Sawmill Upgrade Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Finance & Accounting industry
– New Denmark Sawmill Upgrade firm has clearly differentiated products in the market place. This has enabled Sawmill Denmark to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Sawmill Denmark to invest into research and development (R&D) and innovation.
Analytics focus
– Sawmill Denmark 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 Mary Heisz, Dan Marino 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.
Organizational Resilience of Sawmill Denmark
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sawmill Denmark does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Sawmill Denmark digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sawmill Denmark 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.
Diverse revenue streams
– Sawmill Denmark is present in almost all the verticals within the industry. This has provided firm in New Denmark Sawmill Upgrade 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.
Highly skilled collaborators
– Sawmill Denmark 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 New Denmark Sawmill Upgrade HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Sawmill Denmark 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 Sawmill Denmark is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in New Denmark Sawmill Upgrade Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Sawmill Denmark in the sector have low bargaining power. New Denmark Sawmill Upgrade has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sawmill Denmark to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses New Denmark Sawmill Upgrade | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of New Denmark Sawmill Upgrade are -
Interest costs
– Compare to the competition, Sawmill Denmark 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the New Denmark Sawmill Upgrade 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 Sawmill Denmark has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study New Denmark Sawmill Upgrade 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 Sawmill Denmark 's lucrative customers.
Lack of clear differentiation of Sawmill Denmark products
– To increase the profitability and margins on the products, Sawmill Denmark needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Sawmill Denmark 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 - New Denmark Sawmill Upgrade should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study New Denmark Sawmill Upgrade, it seems that the employees of Sawmill Denmark don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study New Denmark Sawmill Upgrade 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 New Denmark Sawmill Upgrade can leverage the sales team experience to cultivate customer relationships as Sawmill Denmark is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Sawmill Denmark 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study New Denmark Sawmill Upgrade, is just above the industry average. Sawmill Denmark 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.
Capital Spending Reduction
– Even during the low interest decade, Sawmill Denmark 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sawmill Denmark is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study New Denmark Sawmill Upgrade can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities New Denmark Sawmill Upgrade | 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 New Denmark Sawmill Upgrade 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 Sawmill Denmark 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sawmill Denmark 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sawmill Denmark can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, New Denmark Sawmill Upgrade, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Sawmill Denmark 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.
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. Sawmill Denmark can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Sawmill Denmark to increase its market reach. Sawmill Denmark 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.
Loyalty marketing
– Sawmill Denmark 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sawmill Denmark 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 Sawmill Denmark to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sawmill Denmark 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.
Creating value in data economy
– The success of analytics program of Sawmill Denmark has opened avenues for new revenue streams for the organization in the industry. This can help Sawmill Denmark to build a more holistic ecosystem as suggested in the New Denmark Sawmill Upgrade case study. Sawmill Denmark can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sawmill Denmark can use these opportunities to build new business models that can help the communities that Sawmill Denmark operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sawmill Denmark 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 Sawmill Denmark 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.
Threats New Denmark Sawmill Upgrade External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study New Denmark Sawmill Upgrade are -
Stagnating economy with rate increase
– Sawmill Denmark 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 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 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. Sawmill Denmark needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Sawmill Denmark.
Regulatory challenges
– Sawmill Denmark 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sawmill Denmark with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sawmill Denmark 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 New Denmark Sawmill Upgrade .
Increasing wage structure of Sawmill Denmark
– 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 Sawmill Denmark.
Shortening product life cycle
– it is one of the major threat that Sawmill Denmark is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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 Sawmill Denmark business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Sawmill Denmark 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.
Environmental challenges
– Sawmill Denmark 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. Sawmill Denmark can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of New Denmark Sawmill Upgrade 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 New Denmark Sawmill Upgrade 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 New Denmark Sawmill Upgrade 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 New Denmark Sawmill Upgrade 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 New Denmark Sawmill Upgrade 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 Sawmill Denmark needs to make to build a sustainable competitive advantage.
