East Meets West: Rothschild's Investment in Indonesia's Bakrie Group SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of East Meets West: Rothschild's Investment in Indonesia's Bakrie Group
"This case describes the challenges encountered by Nathaniel Rothschild after making a US$3 billion investment in 2010 in a family-owned business group in Asia. Scion of the Rothschild banking dynasty and private equity fund manager, Rothschild and his business associates created a LSE-listed shell company, Bumi PLC, which acquired PT Bumi Resources and Berau Coal. These were among Indonesia's largest coal mines and the largest coal exporters in the world, and were controlled by the Bakries, a powerful Indonesian family whose patriarch was a candidate for the presidency in 2014. After losing at least 70% of his investment in three years, Rothschild eventually requisitioned an extraordinary general meeting in February 2013, attempting to remove the Bakries and their associates from Bumi's management team. Despite western-style corporate governance manoeuvres, the PE investors found it challenging to control the politically connected family in Indonesia. "
Swot Analysis of "East Meets West: Rothschild's Investment in Indonesia's Bakrie Group" written by Morten Bennedsen, Emir Hrnjic, Yupana Wiwattanakantang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Rothschild Bakries facing as an external strategic factors. Some of the topics covered in East Meets West: Rothschild's Investment in Indonesia's Bakrie Group case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the East Meets West: Rothschild's Investment in Indonesia's Bakrie Group casestudy better are - – central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, technology disruption,
increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of East Meets West: Rothschild's Investment in Indonesia's Bakrie Group
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in East Meets West: Rothschild's Investment in Indonesia's Bakrie Group case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Rothschild Bakries, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Rothschild Bakries 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 East Meets West: Rothschild's Investment in Indonesia's Bakrie Group can be done for the following purposes –
1. Strategic planning using facts provided in East Meets West: Rothschild's Investment in Indonesia's Bakrie Group case study
2. Improving business portfolio management of Rothschild Bakries
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 Rothschild Bakries
Strengths East Meets West: Rothschild's Investment in Indonesia's Bakrie Group | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Rothschild Bakries in East Meets West: Rothschild's Investment in Indonesia's Bakrie Group Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Rothschild Bakries in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Rothschild Bakries 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.
Highly skilled collaborators
– Rothschild Bakries 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 East Meets West: Rothschild's Investment in Indonesia's Bakrie Group HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Rothschild Bakries
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Rothschild Bakries 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 Rothschild Bakries digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Rothschild Bakries 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
– Rothschild Bakries is present in almost all the verticals within the industry. This has provided firm in East Meets West: Rothschild's Investment in Indonesia's Bakrie Group 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.
Innovation driven organization
– Rothschild Bakries is one of the most innovative firm in sector. Manager in East Meets West: Rothschild's Investment in Indonesia's Bakrie Group Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Rothschild Bakries 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 Rothschild Bakries is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in East Meets West: Rothschild's Investment in Indonesia's Bakrie Group Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Rothschild Bakries 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.
Strong track record of project management
– Rothschild Bakries is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Rothschild Bakries has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in East Meets West: Rothschild's Investment in Indonesia's Bakrie Group 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.
Operational resilience
– The operational resilience strategy in the East Meets West: Rothschild's Investment in Indonesia's Bakrie Group 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.
Weaknesses East Meets West: Rothschild's Investment in Indonesia's Bakrie Group | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of East Meets West: Rothschild's Investment in Indonesia's Bakrie Group are -
Slow decision making process
– As mentioned earlier in the report, Rothschild Bakries 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. Rothschild Bakries even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Rothschild Bakries 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 to strategic competitive environment developments
– As East Meets West: Rothschild's Investment in Indonesia's Bakrie Group HBR case study mentions - Rothschild Bakries 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.
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 Rothschild Bakries supply chain. Even after few cautionary changes mentioned in the HBR case study - East Meets West: Rothschild's Investment in Indonesia's Bakrie Group, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Rothschild Bakries vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Rothschild Bakries products
– To increase the profitability and margins on the products, Rothschild Bakries needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Rothschild Bakries 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.
Increasing silos among functional specialists
– The organizational structure of Rothschild Bakries is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Rothschild Bakries needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Rothschild Bakries to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study East Meets West: Rothschild's Investment in Indonesia's Bakrie Group, it seems that the employees of Rothschild Bakries 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Rothschild Bakries 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Morten Bennedsen, Emir Hrnjic, Yupana Wiwattanakantang suggests that, Rothschild Bakries 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.
No frontier risks strategy
– After analyzing the HBR case study East Meets West: Rothschild's Investment in Indonesia's Bakrie Group, 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.
Opportunities East Meets West: Rothschild's Investment in Indonesia's Bakrie Group | 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 East Meets West: Rothschild's Investment in Indonesia's Bakrie Group are -
Better consumer reach
– The expansion of the 5G network will help Rothschild Bakries to increase its market reach. Rothschild Bakries 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.
Leveraging digital technologies
– Rothschild Bakries 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 Rothschild Bakries 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 Rothschild Bakries to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Rothschild Bakries 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.
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 Rothschild Bakries 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Rothschild Bakries is facing challenges because of the dominance of functional experts in the organization. East Meets West: Rothschild's Investment in Indonesia's Bakrie Group 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
– Rothschild Bakries 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 East Meets West: Rothschild's Investment in Indonesia's Bakrie Group - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Rothschild Bakries to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Rothschild Bakries 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, East Meets West: Rothschild's Investment in Indonesia's Bakrie Group, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Rothschild Bakries can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Rothschild Bakries 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.
Buying journey improvements
– Rothschild Bakries can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. East Meets West: Rothschild's Investment in Indonesia's Bakrie Group 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.
Building a culture of innovation
– managers at Rothschild Bakries 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.
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. Rothschild Bakries can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats East Meets West: Rothschild's Investment in Indonesia's Bakrie Group External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study East Meets West: Rothschild's Investment in Indonesia's Bakrie Group are -
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. Rothschild Bakries can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Rothschild Bakries with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Rothschild Bakries 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.
High dependence on third party suppliers
– Rothschild Bakries 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.
Stagnating economy with rate increase
– Rothschild Bakries 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.
Consumer confidence and its impact on Rothschild Bakries 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.
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 Rothschild Bakries business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Rothschild Bakries has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Rothschild Bakries 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.
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. Rothschild Bakries 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.
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.
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 Rothschild Bakries.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Rothschild Bakries 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 East Meets West: Rothschild's Investment in Indonesia's Bakrie Group .
Weighted SWOT Analysis of East Meets West: Rothschild's Investment in Indonesia's Bakrie Group 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 East Meets West: Rothschild's Investment in Indonesia's Bakrie Group 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 East Meets West: Rothschild's Investment in Indonesia's Bakrie Group 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 East Meets West: Rothschild's Investment in Indonesia's Bakrie Group 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 East Meets West: Rothschild's Investment in Indonesia's Bakrie Group 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 Rothschild Bakries needs to make to build a sustainable competitive advantage.
