Case Study Description of Enron Corp.: Credit Sensitive Notes
This case investigates an innovative bond issue by Enron. The coupon on the bond is indexed to the company's credit rating, making it a credit derivative structure.
Swot Analysis of "Enron Corp.: Credit Sensitive Notes" written by Sanjiv Das, Stephen Lynagh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Enron Credit facing as an external strategic factors. Some of the topics covered in Enron Corp.: Credit Sensitive Notes case study are - Strategic Management Strategies, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Enron Corp.: Credit Sensitive Notes casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing energy prices, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption,
competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Enron Corp.: Credit Sensitive Notes
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Enron Corp.: Credit Sensitive Notes case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Enron Credit, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Enron Credit 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 Enron Corp.: Credit Sensitive Notes can be done for the following purposes –
1. Strategic planning using facts provided in Enron Corp.: Credit Sensitive Notes case study
2. Improving business portfolio management of Enron Credit
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 Enron Credit
Strengths Enron Corp.: Credit Sensitive Notes | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Enron Credit in Enron Corp.: Credit Sensitive Notes Harvard Business Review case study are -
Highly skilled collaborators
– Enron Credit 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 Enron Corp.: Credit Sensitive Notes HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Enron Credit 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.
High brand equity
– Enron Credit has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Enron Credit to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Enron Credit is one of the most innovative firm in sector. Manager in Enron Corp.: Credit Sensitive Notes Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Enron Credit in the sector have low bargaining power. Enron Corp.: Credit Sensitive Notes has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Enron Credit to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Enron Credit is one of the leading recruiters in the industry. Managers in the Enron Corp.: Credit Sensitive Notes 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)
– Enron Credit 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 Enron Corp.: Credit Sensitive Notes - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Enron Credit 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 Enron Credit is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Enron Corp.: Credit Sensitive Notes Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Enron Corp.: Credit Sensitive Notes 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.
Diverse revenue streams
– Enron Credit is present in almost all the verticals within the industry. This has provided firm in Enron Corp.: Credit Sensitive Notes 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.
Organizational Resilience of Enron Credit
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Enron Credit does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Enron Credit has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Enron Corp.: Credit Sensitive Notes 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.
Weaknesses Enron Corp.: Credit Sensitive Notes | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Enron Corp.: Credit Sensitive Notes are -
Low market penetration in new markets
– Outside its home market of Enron Credit, firm in the HBR case study Enron Corp.: Credit Sensitive Notes needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Enron Corp.: Credit Sensitive Notes 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 Enron Credit has relatively successful track record of launching new products.
High cash cycle compare to competitors
Enron Credit 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.
Increasing silos among functional specialists
– The organizational structure of Enron Credit is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Enron Credit needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Enron Credit to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Enron Corp.: Credit Sensitive Notes, in the dynamic environment Enron Credit has struggled to respond to the nimble upstart competition. Enron Credit 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 Enron Corp.: Credit Sensitive Notes 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 Enron Credit '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 Enron Credit supply chain. Even after few cautionary changes mentioned in the HBR case study - Enron Corp.: Credit Sensitive Notes, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Enron Credit vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Sanjiv Das, Stephen Lynagh suggests that, Enron Credit 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Enron Corp.: Credit Sensitive Notes, it seems that the employees of Enron Credit 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.
Capital Spending Reduction
– Even during the low interest decade, Enron Credit 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.
Products dominated business model
– Even though Enron Credit 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 - Enron Corp.: Credit Sensitive Notes should strive to include more intangible value offerings along with its core products and services.
Opportunities Enron Corp.: Credit Sensitive Notes | 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 Enron Corp.: Credit Sensitive Notes are -
Manufacturing automation
– Enron Credit 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.
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 Enron Credit in the consumer business. Now Enron Credit can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Enron Credit 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.
Creating value in data economy
– The success of analytics program of Enron Credit has opened avenues for new revenue streams for the organization in the industry. This can help Enron Credit to build a more holistic ecosystem as suggested in the Enron Corp.: Credit Sensitive Notes case study. Enron Credit can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Enron Credit can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Enron Corp.: Credit Sensitive Notes 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Enron Credit 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, Enron Corp.: Credit Sensitive Notes, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Enron Credit can use these opportunities to build new business models that can help the communities that Enron Credit operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Loyalty marketing
– Enron Credit 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.
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. Enron Credit 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. Enron Credit 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Enron Credit 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.
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. Enron Credit can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Enron Credit is facing challenges because of the dominance of functional experts in the organization. Enron Corp.: Credit Sensitive Notes 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.
Using analytics as competitive advantage
– Enron Credit 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 Enron Corp.: Credit Sensitive Notes - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Enron Credit to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Enron Corp.: Credit Sensitive Notes External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Enron Corp.: Credit Sensitive Notes are -
Technology acceleration in Forth Industrial Revolution
– Enron Credit has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Enron Credit 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.
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. Enron Credit needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Regulatory challenges
– Enron Credit 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.
Environmental challenges
– Enron Credit 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. Enron Credit can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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. Enron Credit 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.
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 Enron Credit.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Enron Credit 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 Enron Corp.: Credit Sensitive Notes .
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.
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 Enron Credit in the Finance & Accounting sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Enron Credit is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Enron Credit with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Enron Credit business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Enron Corp.: Credit Sensitive Notes, Enron Credit 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 .
Weighted SWOT Analysis of Enron Corp.: Credit Sensitive Notes 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 Enron Corp.: Credit Sensitive Notes 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 Enron Corp.: Credit Sensitive Notes 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 Enron Corp.: Credit Sensitive Notes 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 Enron Corp.: Credit Sensitive Notes 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 Enron Credit needs to make to build a sustainable competitive advantage.