Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A)
Aubrey McClendon, founder and CEO of Chesapeake Energy, was, according to Fortune Magazine, the highest paid U.S. CEO in 2008 receiving over $100 million in total compensation. McClendon received this compensation despite a significant drop in the company's stock price and financial performance during the year. The (A) case addresses the specifics of the compensation and the rationale for the compensation from the perspective of Chesapeake's board and its compensation committee including McClendon's role in consummating several joint ventures, which the board and committee believed positioned the company for future growth in the relatively young industry of unconventional natural gas exploration and extraction. In addition, the (A) case describes the role of the compensation committee and the company's executive performance measurement factors.
Authors :: Paul M. Healy, Clayton Rose, Aldo Sesia
Swot Analysis of "Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A)" written by Paul M. Healy, Clayton Rose, Aldo Sesia includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Compensation Mcclendon facing as an external strategic factors. Some of the topics covered in Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) case study are - Strategic Management Strategies, Compensation, Corporate governance, Ethics, Financial analysis, Financial management, Growth strategy, Joint ventures, Leadership and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) casestudy better are - – technology disruption, increasing commodity prices, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, increasing energy prices, increasing transportation and logistics costs,
increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Compensation Mcclendon, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Compensation Mcclendon 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 Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) can be done for the following purposes –
1. Strategic planning using facts provided in Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) case study
2. Improving business portfolio management of Compensation Mcclendon
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 Compensation Mcclendon
Strengths Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Compensation Mcclendon in Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) Harvard Business Review case study are -
Highly skilled collaborators
– Compensation Mcclendon 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 Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Compensation Mcclendon are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Sustainable margins compare to other players in Finance & Accounting industry
– Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) firm has clearly differentiated products in the market place. This has enabled Compensation Mcclendon to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Compensation Mcclendon to invest into research and development (R&D) and innovation.
Training and development
– Compensation Mcclendon has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) 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.
Ability to lead change in Finance & Accounting field
– Compensation Mcclendon 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 Compensation Mcclendon in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Compensation Mcclendon 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 Paul M. Healy, Clayton Rose, Aldo Sesia 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Compensation Mcclendon digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Compensation Mcclendon 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.
Operational resilience
– The operational resilience strategy in the Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (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.
Low bargaining power of suppliers
– Suppliers of Compensation Mcclendon in the sector have low bargaining power. Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Compensation Mcclendon to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Compensation Mcclendon is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Compensation Mcclendon has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Compensation Mcclendon to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Compensation Mcclendon is present in almost all the verticals within the industry. This has provided firm in Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (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.
Weaknesses Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A), in the dynamic environment Compensation Mcclendon has struggled to respond to the nimble upstart competition. Compensation Mcclendon has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (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 Compensation Mcclendon has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Compensation Mcclendon needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– Compensation Mcclendon 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.
High cash cycle compare to competitors
Compensation Mcclendon 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, Compensation Mcclendon 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. Compensation Mcclendon even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to strategic competitive environment developments
– As Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) HBR case study mentions - Compensation Mcclendon takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Low market penetration in new markets
– Outside its home market of Compensation Mcclendon, firm in the HBR case study Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Paul M. Healy, Clayton Rose, Aldo Sesia suggests that, Compensation Mcclendon 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.
Lack of clear differentiation of Compensation Mcclendon products
– To increase the profitability and margins on the products, Compensation Mcclendon needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Compensation Mcclendon 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 - Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) should strive to include more intangible value offerings along with its core products and services.
Opportunities Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (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 Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) are -
Creating value in data economy
– The success of analytics program of Compensation Mcclendon has opened avenues for new revenue streams for the organization in the industry. This can help Compensation Mcclendon to build a more holistic ecosystem as suggested in the Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) case study. Compensation Mcclendon can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Compensation Mcclendon can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Compensation Mcclendon can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Compensation Mcclendon 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 Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Compensation Mcclendon to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Compensation Mcclendon to increase its market reach. Compensation Mcclendon 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 Compensation Mcclendon 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.
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. Compensation Mcclendon can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Compensation Mcclendon 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Compensation Mcclendon 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, Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Compensation Mcclendon 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Compensation Mcclendon 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 Compensation Mcclendon to hire the very best people irrespective of their geographical location.
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 Compensation Mcclendon in the consumer business. Now Compensation Mcclendon can target international markets with far fewer capital restrictions requirements than the existing system.
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 Compensation Mcclendon 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.
Threats Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Compensation Mcclendon 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 Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) .
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 Compensation Mcclendon.
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. Compensation Mcclendon can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Compensation Mcclendon 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.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Compensation Mcclendon with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Compensation Mcclendon 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.
Shortening product life cycle
– it is one of the major threat that Compensation Mcclendon is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Compensation Mcclendon
– 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 Compensation Mcclendon.
Technology acceleration in Forth Industrial Revolution
– Compensation Mcclendon has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Compensation Mcclendon 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.
Regulatory challenges
– Compensation Mcclendon 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A), Compensation Mcclendon 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 Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (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 Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (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 Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (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 Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (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 Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (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 Compensation Mcclendon needs to make to build a sustainable competitive advantage.
