Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A)
Essar Group (Essar), a large diversified conglomerate based in India, needs to raise significant capital through an initial public offering (IPO) and has to decide whether to do so through the Indian Stock Exchange, the London Stock Exchange or the New York Stock Exchange. The company will have to continue to report in Indian GAAP and, if it decides to list its IPO in the United States or Europe, it also will have to adopt either U.S. GAAP or IFRS. The chief financial officer of Essar has to recommend to management where to raise the needed capital and what accounting standard to adopt. The B case 9B13B015 discloses the decision and describes some of the implementation issues.
Authors :: David J. Sharp, Sudershan Kuntluru, Paritosh Basu, Sanjay Chauhan
Swot Analysis of "Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A)" written by David J. Sharp, Sudershan Kuntluru, Paritosh Basu, Sanjay Chauhan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Essar Gaap facing as an external strategic factors. Some of the topics covered in Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) casestudy better are - – wage bills are increasing, there is backlash against globalization, geopolitical disruptions, technology disruption, talent flight as more people leaving formal jobs, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy,
challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Essar Gaap, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Essar Gaap 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) can be done for the following purposes –
1. Strategic planning using facts provided in Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) case study
2. Improving business portfolio management of Essar Gaap
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 Essar Gaap
Strengths Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Essar Gaap in Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) Harvard Business Review case study are -
Highly skilled collaborators
– Essar Gaap 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Finance & Accounting industry
– Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) firm has clearly differentiated products in the market place. This has enabled Essar Gaap to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Essar Gaap to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Essar Gaap in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Essar Gaap 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Essar Gaap is one of the leading recruiters in the industry. Managers in the Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (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
– Essar Gaap 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 Essar Gaap in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Essar Gaap digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Essar Gaap 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
– Essar Gaap is present in almost all the verticals within the industry. This has provided firm in Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (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.
Organizational Resilience of Essar Gaap
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Essar Gaap does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (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 Essar Gaap in the sector have low bargaining power. Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Essar Gaap to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Essar Gaap is one of the most innovative firm in sector. Manager in Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) are -
Lack of clear differentiation of Essar Gaap products
– To increase the profitability and margins on the products, Essar Gaap needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Essar Gaap, firm in the HBR case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Essar Gaap 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.
Increasing silos among functional specialists
– The organizational structure of Essar Gaap is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Essar Gaap needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Essar Gaap to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (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.
Aligning sales with marketing
– It come across in the case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) can leverage the sales team experience to cultivate customer relationships as Essar Gaap is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A), it seems that the employees of Essar Gaap 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) 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 Essar Gaap 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, David J. Sharp, Sudershan Kuntluru, Paritosh Basu, Sanjay Chauhan suggests that, Essar Gaap 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Essar Gaap is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A), is just above the industry average. Essar Gaap 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.
Opportunities Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) are -
Building a culture of innovation
– managers at Essar Gaap 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.
Buying journey improvements
– Essar Gaap can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Essar Gaap 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.
Learning at scale
– Online learning technologies has now opened space for Essar Gaap 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.
Better consumer reach
– The expansion of the 5G network will help Essar Gaap to increase its market reach. Essar Gaap 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.
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. Essar Gaap can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Essar Gaap can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Essar Gaap can use these opportunities to build new business models that can help the communities that Essar Gaap operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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 Essar Gaap 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.
Manufacturing automation
– Essar Gaap 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Essar Gaap 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, Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (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
– Essar Gaap 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.
Creating value in data economy
– The success of analytics program of Essar Gaap has opened avenues for new revenue streams for the organization in the industry. This can help Essar Gaap to build a more holistic ecosystem as suggested in the Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) case study. Essar Gaap can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) are -
Regulatory challenges
– Essar Gaap 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Essar Gaap 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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (A) .
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. Essar Gaap can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Essar Gaap needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Consumer confidence and its impact on Essar Gaap 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.
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.
Stagnating economy with rate increase
– Essar Gaap 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.
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.
Environmental challenges
– Essar Gaap 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. Essar Gaap can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Essar Gaap 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.
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 Essar Gaap.
Shortening product life cycle
– it is one of the major threat that Essar Gaap is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Essar Gaap business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (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 Essar Energy: Indian GAAP, U.S. GAAP or IFRS? (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 Essar Gaap needs to make to build a sustainable competitive advantage.
