Trading the Right to Pollute: Developing the Market for Pollution Allowances SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Trading the Right to Pollute: Developing the Market for Pollution Allowances
Examines the issues underlying the formation of the market for tradeable pollution allowances, following the requirement of Title IV of the 1990 Amendments to the Clean Air Act. Examines the implications that these trade the allowances hold for the U.S. electric utilities industry and the strategic choices these utilities faced in 1992.
Swot Analysis of "Trading the Right to Pollute: Developing the Market for Pollution Allowances" written by Carliss Y. Baldwin, Susan E.A. Hall includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Allowances Utilities facing as an external strategic factors. Some of the topics covered in Trading the Right to Pollute: Developing the Market for Pollution Allowances case study are - Strategic Management Strategies, Financial markets, Strategic planning, Sustainability and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Trading the Right to Pollute: Developing the Market for Pollution Allowances casestudy better are - – technology disruption, wage bills are increasing, increasing commodity prices, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion,
central banks are concerned over increasing inflation, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Trading the Right to Pollute: Developing the Market for Pollution Allowances
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Trading the Right to Pollute: Developing the Market for Pollution Allowances case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Allowances Utilities, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Allowances Utilities 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 Trading the Right to Pollute: Developing the Market for Pollution Allowances can be done for the following purposes –
1. Strategic planning using facts provided in Trading the Right to Pollute: Developing the Market for Pollution Allowances case study
2. Improving business portfolio management of Allowances Utilities
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 Allowances Utilities
Strengths Trading the Right to Pollute: Developing the Market for Pollution Allowances | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Allowances Utilities in Trading the Right to Pollute: Developing the Market for Pollution Allowances Harvard Business Review case study are -
Highly skilled collaborators
– Allowances Utilities 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 Trading the Right to Pollute: Developing the Market for Pollution Allowances HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Allowances Utilities has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Trading the Right to Pollute: Developing the Market for Pollution Allowances 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 recruit top talent
– Allowances Utilities is one of the leading recruiters in the industry. Managers in the Trading the Right to Pollute: Developing the Market for Pollution Allowances are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Finance & Accounting industry
– Trading the Right to Pollute: Developing the Market for Pollution Allowances firm has clearly differentiated products in the market place. This has enabled Allowances Utilities to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Allowances Utilities to invest into research and development (R&D) and innovation.
High brand equity
– Allowances Utilities has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Allowances Utilities to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Allowances Utilities 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 Trading the Right to Pollute: Developing the Market for Pollution Allowances - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Allowances Utilities 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 Carliss Y. Baldwin, Susan E.A. Hall 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.
Successful track record of launching new products
– Allowances Utilities has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Allowances Utilities has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Innovation driven organization
– Allowances Utilities is one of the most innovative firm in sector. Manager in Trading the Right to Pollute: Developing the Market for Pollution Allowances Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Allowances Utilities is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Trading the Right to Pollute: Developing the Market for Pollution Allowances 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.
Cross disciplinary teams
– Horizontal connected teams at the Allowances Utilities 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.
Weaknesses Trading the Right to Pollute: Developing the Market for Pollution Allowances | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Trading the Right to Pollute: Developing the Market for Pollution Allowances are -
No frontier risks strategy
– After analyzing the HBR case study Trading the Right to Pollute: Developing the Market for Pollution Allowances, 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 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 Allowances Utilities supply chain. Even after few cautionary changes mentioned in the HBR case study - Trading the Right to Pollute: Developing the Market for Pollution Allowances, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Allowances Utilities vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Allowances Utilities 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Trading the Right to Pollute: Developing the Market for Pollution Allowances, is just above the industry average. Allowances Utilities 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.
Products dominated business model
– Even though Allowances Utilities 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 - Trading the Right to Pollute: Developing the Market for Pollution Allowances should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Allowances Utilities 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.
Slow decision making process
– As mentioned earlier in the report, Allowances Utilities 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. Allowances Utilities 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.
Low market penetration in new markets
– Outside its home market of Allowances Utilities, firm in the HBR case study Trading the Right to Pollute: Developing the Market for Pollution Allowances needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Allowances Utilities 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.
Aligning sales with marketing
– It come across in the case study Trading the Right to Pollute: Developing the Market for Pollution Allowances 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 Trading the Right to Pollute: Developing the Market for Pollution Allowances can leverage the sales team experience to cultivate customer relationships as Allowances Utilities is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Trading the Right to Pollute: Developing the Market for Pollution Allowances 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 Allowances Utilities 's lucrative customers.
Opportunities Trading the Right to Pollute: Developing the Market for Pollution Allowances | 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 Trading the Right to Pollute: Developing the Market for Pollution Allowances are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Allowances Utilities 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.
Better consumer reach
– The expansion of the 5G network will help Allowances Utilities to increase its market reach. Allowances Utilities 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 Allowances Utilities 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.
Developing new processes and practices
– Allowances Utilities 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.
Manufacturing automation
– Allowances Utilities 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.
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. Allowances Utilities can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Allowances Utilities 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.
Loyalty marketing
– Allowances Utilities 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.
Leveraging digital technologies
– Allowances Utilities 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.
Using analytics as competitive advantage
– Allowances Utilities 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 Trading the Right to Pollute: Developing the Market for Pollution Allowances - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Allowances Utilities to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Allowances Utilities has opened avenues for new revenue streams for the organization in the industry. This can help Allowances Utilities to build a more holistic ecosystem as suggested in the Trading the Right to Pollute: Developing the Market for Pollution Allowances case study. Allowances Utilities can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Allowances Utilities 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, Trading the Right to Pollute: Developing the Market for Pollution Allowances, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Allowances Utilities is facing challenges because of the dominance of functional experts in the organization. Trading the Right to Pollute: Developing the Market for Pollution Allowances 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.
Threats Trading the Right to Pollute: Developing the Market for Pollution Allowances External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Trading the Right to Pollute: Developing the Market for Pollution Allowances are -
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. Allowances Utilities needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Allowances Utilities with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Allowances Utilities is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Allowances Utilities 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Trading the Right to Pollute: Developing the Market for Pollution Allowances, Allowances Utilities 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 .
Technology acceleration in Forth Industrial Revolution
– Allowances Utilities has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Allowances Utilities 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Allowances Utilities 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 Trading the Right to Pollute: Developing the Market for Pollution Allowances .
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.
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. Allowances Utilities 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.
Consumer confidence and its impact on Allowances Utilities 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.
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. Allowances Utilities can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
High dependence on third party suppliers
– Allowances Utilities 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.
Weighted SWOT Analysis of Trading the Right to Pollute: Developing the Market for Pollution Allowances 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 Trading the Right to Pollute: Developing the Market for Pollution Allowances 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 Trading the Right to Pollute: Developing the Market for Pollution Allowances 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 Trading the Right to Pollute: Developing the Market for Pollution Allowances 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 Trading the Right to Pollute: Developing the Market for Pollution Allowances 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 Allowances Utilities needs to make to build a sustainable competitive advantage.
