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 - – increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy,
challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, 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 -
Innovation driven organization
– Compensation Mcclendon is one of the most innovative firm in sector. Manager in Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– 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.
High switching costs
– The high switching costs that Compensation Mcclendon 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.
Organizational Resilience of Compensation Mcclendon
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Compensation Mcclendon does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Superior customer experience
– The customer experience strategy of Compensation Mcclendon in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
Learning organization
- Compensation Mcclendon 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 Compensation Mcclendon is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Compensation Mcclendon is one of the leading recruiters in the industry. Managers in the Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (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.
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.
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.
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 -
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.
Interest costs
– Compare to the competition, Compensation Mcclendon 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.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Compensation Mcclendon 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 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.
No frontier risks strategy
– After analyzing the HBR case study Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A), it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners
– Because of the regulatory requirements, 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A), it seems that the employees of Compensation Mcclendon 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (A), is just above the industry average. Compensation Mcclendon 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.
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.
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 -
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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Compensation Mcclendon 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.
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.
Building a culture of innovation
– managers at Compensation Mcclendon 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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Compensation Mcclendon is facing challenges because of the dominance of functional experts in the organization. Aubrey McClendon's Special Incentive Compensation at Chesapeake Energy (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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Compensation Mcclendon can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Compensation Mcclendon 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.
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 -
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 Compensation Mcclendon in the Finance & Accounting sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Compensation Mcclendon 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.
High dependence on third party suppliers
– Compensation Mcclendon 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.
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. Compensation Mcclendon 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 Compensation Mcclendon.
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 Compensation Mcclendon 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 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 .
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.
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. Compensation Mcclendon needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
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.
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.
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.
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.